The partnership of Jordan and O\'Neal began business on January 1, 20X7. Each pa

Question

The partnership of Jordan and O'Neal began business on January 1, 20X7. Each partner contributed the following assets (the noncash assets are stated at their fair values on January 1, 20X7) Jordan 0'Neal $61,800 51,800 Cash Inventories Land Equipment 81,800 130,400 102,000 The land was subject to a $50,700 mortgage, which the partnership assumed on January 1, 20x7 The equipment was subject to an installment note payable that had an unpaid principal amount of $21,400 on January 1, 20X7. The partnership also assumed this note payable. Jordan and O'Neal agreed to share partnership income and losses in the following manner: ordan O'Neal Interest on beginning capital balances Salaries Remainder 3% $12,400 $12,400 69% 40%

Explanation / Answer

c.

d.

Working:

JORDAN-O'NEAL PARTNERSHIP Balance Sheet At December 31, 20X7 Assets Cash 167620 Accounts receivable 22900 Inventory 21400 Land 130400 Equipment (net) ($102000 - $6600) 95400 Total assets 437720 Liabilities and Capital Liabilities: Accounts payable 7100 Accrued expenses payable 6900 Installment note payable ($21400 - $3900) 17500 Mortgage payable ($50700 - $5400) 45300 Total liabilities 76800 Capital: Jordan, capital ($224200 + $14703 - $11440) 227463 O'Neal, capital ($131500 + $13397 - $11440) 133457 Total capital 360920 Total liabilities and capital 437720

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