Christie and Jergens formed a partnership with capital contributions of $360,000

Question

Christie and Jergens formed

a partnership with capital contributions of $360,000 and $460,000, respectively. Their partnership agreement calls for Christie to receive a $66,000 per year salary. Also, each partner is to receive an interest allowance equal to 10% of a partner's beginning capital investments. The remaining income or loss is to be divided equally. If the net income for the current year is $153,000, then Christie and Jergens's respective shares are:

$104,500; $48,500.

$102,000; $46,000.

$76,500; $76,500.

$41,000; $112,000.

$67,171; $85,829.

Chair Company issued 8%, 15-year bonds with a par value of $580,000 that pay interest semi-annually. The current market rate is 8%. The journal entry to record each semiannual interest payment is:

Howard Corporation sold 16,000 shares of its $10 par value common stock at a cash price of $11 per share. The entry to record this transaction would include:

Christie and Jergens formed

Explanation / Answer

Solution.

1. $104,500; $48,500.

Christie and Jergens's respective shares are calculated below :

2. Debit Bond Interest Expense $23,200; credit Cash $23,200.

Journal entry :

Bond Interest Expense Dr. $23,200

To Cash $23,200.

( Being the cash payable on Bond interest semi annually of 580,000X8%X6monthly i.e. 23,200 )

3.

Journal entry :

Cash Dr. 176,000

To Common stock 160,000

To Paid in capital 16,000

( Being sell of stock more than the face value increased in paid in capital recorded )

4. $2,200

Calculation of the total anount of paid in capital in excess of par :

Paid in capital in excess of par = (Cash received of common stock - Value of Common stock )

= 14,200 - 120X 100

= 14,200 - 12,000

= $2,200

  

Particular Christie Jergens Salary only to Christie 66,000 - Interest on capital @ 10% on 360,000 and 460,000 36,000 46,000 Profit (153,000-82,000-66,000) distribute equally 2,500 2,500 Shares 104,500 48,500

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