Fred and George have been in partnership for many years. The partners, who share profits and losses on a 60:40 basis, respectively, wish to retire and have agreed to liquidate the business. Liquidation expenses are estimated to be $10,000. At the date the partnership ceases operations, the balance sheet is as follows:   Cash $ 100,000      Liabilities $ 80,000      Noncash assets 200,000      Fred, capital 100,000      George, capital 120,000      Total assets $ 300,000      Total liabilities and capital $ 300,000    1. Prepare journal entries for the following transactions: (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) a. Distributed safe cash payments to the partners. b. Paid $40,000 of the partnership’s liabilities. c. Sold noncash assets for $220,000. d. Distributed safe cash payments to the partners. e. Paid all remaining partnership liabilities of $40,000. f. Paid $8,000 in liquidation expenses; no further expenses will be incurred. g. Distributed remaining cash held by the business to the partners. Ex. 2 A local partnership is to be liquidated. Commissions and other liquidation expenses are expected to total $19,000. The business’s balance sheet prior to the commencement of liquidation is as follows:   Cash $ 27,000    Liabilities $ 40,000    Noncash assets 254,000    Simpson, capital (20%) 18,000    Hart, capital (40%) 40,000    Bobb, capital (20%) 48,000    Reidl, capital (20%) 135,000       Total assets $281,000       Total liabilities and capital $281,000  Prepare a predistribution plan for this partnership. Partner Capital Balance Loss Allocation Maximum loss that can be absorb Schedule 1 Sampson Hart Bobb Reidl Schedule 2 Hart Bobb Reidl Schedule 3 Bobb Reidl Sampson Hart Bobb Reidl Reported balances Assumed loss Schedule 1 Adjusted Balances Assumed loss Schedule 2 Adjusted balances Assumed loss Schedule 3 Adjusted balances EX. 3 The Prince-Robbins partnership has the following capital account balances on January 1, 2015:   Prince, Capital $ 70,000     Robbins, Capital 60,000         Prince is allocated 80 percent of all profits and losses with the remaining 20 percent assigned to Robbins after interest of 10 percent is given to each partner based on beginning capital balances.       On January 2, 2015, Jeffrey invests $37,000 cash for a 20 percent interest in the partnership. This transaction is recorded by the goodwill method. After this transaction, 10 percent interest is still to go to each partner. Profits and losses will then be split as follows: Prince (50%), Robbins (30%), and Jeffrey (20%). In 2015, the partnership reports a net income of $15,000. a. Prepare the journal entry to record Jeffrey entrance into the partnership on January 2, 2015. (If no entry .

1. Fred and George have been in partnership for many years. The
partners, who share profits and losses on a 60:40 basis,
respectively, wish to retire and have agreed to liquidate the
business. Liquidation expenses are estimated to be $10,000. At
the date the partnership ceases operations, the balance sheet is
as follows:
Cash
$
100,000
Liabilities
$
80,000
Noncash assets
200,000
Fred, capital
100,000
George, capital
120,000

2. Total assets
$
300,000
Total liabilities and capital
$
300,000
1.
Prepare journal entries for the following transactions: (Do not
round intermediate calculations. If no entry is required for a
transaction/event, select "No journal entry required" in the first
account field.)
a.
Distributed safe cash payments to the partners.
b.
Paid $40,000 of the partnership’s liabilities.
c.
Sold noncash assets for $220,000.
d.
Distributed safe cash payments to the partners.
e.

3. Paid all remaining partnership liabilities of $40,000.
f.
Paid $8,000 in liquidation expenses; no further expenses will be
incurred.
g.
Distributed remaining cash held by the business to the partners.
Ex. 2
A local partnership is to be liquidated. Commissions and other
liquidation expenses are expected to total $19,000. The
business’s balance sheet prior to the commencement of
liquidation is as follows:
Cash
$ 27,000
Liabilities
$ 40,000
Noncash assets
254,000
Simpson, capital (20%)
18,000
Hart, capital (40%)
40,000
Bobb, capital (20%)
48,000

4. Reidl, capital (20%)
135,000
Total assets
$281,000
Total liabilities and capital
$281,000
Prepare a predistribution plan for this partnership.
Partner
Capital Balance
Loss Allocation
Maximum loss that can be absorb
Schedule 1
Sampson

5. Hart
Bobb
Reidl
Schedule 2
Hart
Bobb
Reidl
Schedule 3
Bobb

6. Reidl
Sampson
Hart
Bobb
Reidl
Reported balances
Assumed loss
Schedule 1
Adjusted Balances

7. Assumed loss
Schedule 2
Adjusted balances
Assumed loss
Schedule 3
Adjusted balances

8. EX. 3
The Prince-Robbins partnership has the following capital
account balances on January 1, 2015:
Prince, Capital
$
70,000
Robbins, Capital
60,000
Prince is allocated 80 percent of all profits and losses with
the remaining 20 percent assigned to Robbins after interest of
10 percent is given to each partner based on beginning capital
balances.
On January 2, 2015, Jeffrey invests $37,000 cash for a 20
percent interest in the partnership. This transaction is recorded
by the goodwill method. After this transaction, 10 percent
interest is still to go to each partner. Profits and losses will then
be split as follows: Prince (50%), Robbins (30%), and Jeffrey
(20%). In 2015, the partnership reports a net income of $15,000.
a.
Prepare the journal entry to record Jeffrey entrance into the
partnership on January 2, 2015. (If no entry is required for a
transaction/event, select "No journal entry required" in the first
account field.)

9. EX. 4
On January 1, 2015, Alamar Corporation acquired a 40 percent
interest in Burks, Inc., for $210,000. On that date, Burks’s
balance sheet disclosed net assets with both a fair and book
value of $360,000. During 2015, Burks reported net income of
$80,000 and cash dividends of $25,000. Alamar sold inventory
costing $30,000 to Burks during 2015 for $40,000. Burks used
all of this merchandise in its operations during 2015.
Prepare all of Alamar’s 2015 journal entries to apply the equity
method to this investment. (If no entry is required for a
transaction/event, select "No journal entry required" in the first
account field.)
· Record the acquisition of a 40 percent interest in Burks.
EX. 4
On December 31, 2014, PanTech Company invests $20,000 in
SoftPlus, a variable interest entity. In contractual agreements
completed on that date, PanTech established itself as the
primary beneficiary of SoftPlus. Previously, PanTech had no
equity interest in SoftPlus. Immediately after PanTech’s
investment, SoftPlus presents the following balance sheet:
Cash
$
20,000
Long-term debt
$
120,000

10. Marketing software
140,000
Noncontrolling interest
60,000
Computer equipment
40,000
PanTech equity interest
20,000
Total assets
$
200,000
Total liabilities and equity
$
200,000

11. Each of the above amounts represents an assessed fair value at
December 31, 2014, except for the marketing software.
a.
If the marketing software was undervalued by $20,000, what
amounts for SoftPlus would appear in PanTech’s December 31,
2014, consolidated financial statementounts?
Account
Amount
b.
If the marketing software was overvalued by $20,000, what

12. amounts for SoftPlus would appear in PanTech’s December 31,
2014, consolidated financial statements?
Account
Amount
EX. 5
On January 1, 2014, Harrison, Inc., acquired 90 percent of Starr
Company in exchange for $1,125,000 fair-value consideration.
The total fair value of Starr Company was assessed at
$1,200,000. Harrison computed annual excess fair-value
amortization of $8,000 based on the difference between Starr’s
total fair value and its underlying net asset fair value. The
subsidiary reported earnings of $70,000 in 2014 and $90,000 in
2015 with dividend declarations of $30,000 each year. Apart
from its investment in Starr, Harrison had net income of
$220,000 in 2014 and $260,000 in 2015.
a.
What is the consolidated net income in each of these two years?

13. 2104
2015
Consolidated net income
b.
What is the ending noncontrolling interest balance as of
December 31, 2015?
Noncontrolling Interest balance
EX.6
On January 1, 2014, Corgan Company acquired 80 percent of
the outstanding voting stock of Smashing, Inc., for a total of
$980,000 in cash and other consideration. At the acquisition
date, Smashing had common stock of $700,000, retained
earnings of $250,000, and a noncontrolling interest fair value of
$245,000. Corgan attributed the excess of fair value over
Smashing’s book value to various covenants with a 20-year life.
Corgan uses the equity method to account for its investment in
Smashing.
During the next two years, Smashing reported the following:
Net Income
Dividends
Inventory Purchases from Corgan
2014
$

14. 150,000
$
35,000
$
100,000
2015
130,000
45,000
120,000
Corgan sells inventory to Smashing using a 60 percent markup
on cost. At the end of 2014 and 2015, 40 percent of the current
year purchases remain in Smashing’s inventory.
a.
Compute the equity method balance in Corgan’s Investment in
Smashing, Inc., account as of December 31, 2015.
Investment Balance 12/31/15
$
b.
Prepare the worksheet adjustments for the December 31, 2015,
consolidation of Corgan and Smashing.(If no entry is required
for a transaction/event, select "No journal entry required" in the

15. first account field.)
Transactions
Consolidating Entries
Debit
Credit
1. Prepare entry G 5. Prepare entry D
2. Prepare entry S 6. Prepare entry E
3. Prepare entry A 7. Prepare TI
4. Prepare entry I 8. Prepare G
*There are 48 journal entries in all (including the “No journal
entry”)
EX. 7
Padre holds 100 percent of the outstanding shares of Sonora. On
January 1, 2013, Padre transferred equipment to Sonora for
$95,000. The equipment had cost $130,000 originally but had a
$50,000 book value and five-year remaining life at the date of
transfer. Depreciation expense is computed according to the
straight-line method with no salvage value.
Consolidated financial statements for 2015 currently are
being prepared. What worksheet entries are needed in
connection with the consolidation of this asset? Assume that the
parent applies the partial equity method. (If no entry is required
for a transaction/event, select "No journal entry required" in the
first account field.)
Transactions
Consolidating Entries
Debit

16. Credit
1. Prepare entry TA
2. Prepare entry ED
Note: There are twelve journal entries (including the” No
journal entry”)
EX. 8 A
The Walston Company is to be liquidated and has the following
liabilities:
Income taxes
$
8,000
Notes payable (secured by land)
120,000
Accounts payable
85,000
Salaries payable (evenly divided between two employees)
6,000
Bonds payable
70,000
Administrative expenses for liquidation
20,000
The company has the following assets:

17. Book Value
Fair Value
Current assets
$
80,000
$
35,000
Land
100,000
90,000
Buildings and equipment
100,000
110,000
How much money will the holders of the notes payable collect
following liquidation?
Total Amount Collected
$
EX.8B
On January 1, Dandu Corporation started a subsidiary in a
foreign country. On April 1, the subsidiary purchased inventory
at a cost of 120,000 local currency units (LCU). One-fourth of
this inventory remained unsold at the end of the year while 40
percent of the liability from the purchase had not yet been paid.
The U.S. $ per LCU exchange rates were as follows:
January 1

18. $
0.40
April 1
0.38
Average for the current year
0.36
December 31
0.35
What should be the December 31 Inventory and Accounts
Payable balances for this foreign subsidiary as translated into
U.S. dollars using the current rate method?
Inventory
$
Accounts Payable
$
EX. 8C
Board Company has a foreign subsidiary that began operations
at the start of 2015 with assets of 132,000 kites (the local
currency unit) and liabilities of 54,000 kites. During this initial
year of operation, the subsidiary reported a profit of 26,000

19. kites. It distributed two dividends, each for 5,000 kites with one
dividend declared on March 1 and the other on October 1.
Applicable exchange rates for 1 kite follow:
January 1, 2015 (start of business)
$
0.80
March 1, 2015
0.78
Weighted average rate for 2015
0.77
October 1, 2015
0.76
December 31, 2015
0.75
a.
Assume that the kite is this subsidiary’s functional currency.
What translation adjustment would Board report for the year
2015?
Negative Translation adjustment
$