1101AFE Accounting Principles Semester 2 2016

Assessable Homework Chapter 13

QUESTION 1.
Morris Roberts invests land into a new partnership with Phillip Andrews. Roberts purchased the land in 2013
for $300 000. An appraiser now values the land at $700 000. Roberts wants $700 000 capital in the new
partnership, but Andrews objects. Andrews believes that Roberts contribution should be measured by the
carrying amount (book value) of the land. Roberts and Andrews seek your advice.
Required:
1. Which value of the land is appropriate for measuring Roberts capital carrying amount or current
market value. Explain why.

2. Prepare the general journal entry to record Roberts investment in the partnership.
Explanations (Narrations) are NOT required.

DATE ACCOUNTS AND EXPLANATIONS DEBIT CREDIT

Question 2.

Farrah and Garth had beginning capital balances of $25 000 and $20 000 respectively. The two partners fail to
agree on a profit-and-loss sharing ratio. For the first month (June 2014), the partnership lost $6 000.

1. How much of this loss goes to Farrah? How much goes to Garth? Explain why.

2. Prepare the journal entry to record the allocation of the loss to each partner.

DATE ACCOUNTS AND EXPLANATIONS DEBIT CREDIT

3. The partners withdrew no assets during June 2014. What is each partners capital balance at the
30th June 2014. Prepare a T-account for each partners capital.