P16-6

1. Reported Capital Balances:

Jon Kel Gla Total
Capital January 2, 2011 $ 30,000 $ 30,000 $ 30,000 $ 30,000
Add: Investments For 2011 5,000 5,000
Less: Withdrawals For 2011 (5,000) (4,000) (9,000)
Net Contributed Capital 25,000 26,000 35,000 86,000
Income allocation- Schedule A 11,000 4,000 4,000 19,000
Capital December 31, 2011 36,000 30,000 39,000 105,000
Add: Investments For 2012 5,000 5,000
Less: Withdrawals For 2012 (3,000) (8,000) (11,000)
Net Contributed Capital 41,000 27,000 31,000 99,000
Income allocation- Schedule B 12,100 4,500 5,400 22,000
Capital December 31, 2012 53,100 31,500 36,400 121,000
Add: Investments For 2013 6,000 6,000
Less: Withdrawals For 2013 (4,000) (2,000) (6,000)
Net Contributed Capital 53,100 27,500 40,400 121,000
Income Allocation- Schedule C 15,610 6,450 6,940 29,000
Capital January 1, 2014 $ 68,710 $ 33,950 $ 47,340 $ 150,000

Schedule A Net Income Jon Kel Gla

Income to allocate $ 19,000
Interest allowances:
Jon (30, 000 x 10%) (3,000) 3,000
Kel (30, 000 x 10%) (3,000) 3,000
Gla (30, 000 x 10%) (3,000) 3,000
Remainder to devide 10,000
Salary to jon (7,000) 7,000
Remainder to devide 3,000
Divided Equally (3,000) 1,000 1,000 1,000
Income allocation $ - $ 11,000 $ 4,000 $ 4,000

Schedule B Net Income Jon Kel Gla

Income to allocate $ 19,000
Interest allowances:
Jon (36, 000 x 10%) (3,600) 3,600
Kel (30, 000 x 10%) (3,000) 3,000
Gla (39, 000 x 10%) (3,900) 3,900
Remainder to devide 11,500
Salary to jon (7,000) 7,000
Remainder to devide 4,500
Divided Equally (4,500) 1,500 1,500 1,500
Income allocation $ - $ 12,100 $ 4,500 $ 5,400
Schedule C Net Income Jon Kel Gla
Income to allocate $ 29,000
Interest allowances:
Jon (53, 100 x 10%) (5,310) 5,310
Kel (31, 500 x 10%) (3,150) 3,150
Gla (36, 400 x 10%) (3,640) 3,640
Remainder to devide 16,900
Salary to jon (7,000) 7,000
Remainder to devide 9,900
Divided Equally (9,900) 3,300 3,300 3,300
Income allocation $ - $ 15,610 $ 6,450 $ 6,940
2. Correct Income and Capital Account Balances:

2011 2012 2013

Reported Income $ 19,000 $ 22,000 $ 29,000
Understatement of depreciation (2,000) (2,000) (2,000)
Understatement of Inventory at Dec 31, 2013 8,000
Corrected Income $ 17,000 $ 20,000 $ 35,000

Jon Kel Gla Total

Capital per books $ 68,710 $ 33,950 $ 47,340 $ 150,000
Understatement 666 667 667 2,000
Capital as corrected $ 69,376 $ 34,617 $ 48,007 $ 152,000

3. Correcting entry on Jan 1, 2014:

Inventory $ 8,000
Jon Capital $ 666
Kel Capital 667
Gla Capital 667
Accumulated depreciation 6,000
To correct prior years profits and adjust inventory and accumulated depreciation.

NB: karena sisa pendapatan dibagi secara merata, jadi tidak perlu menghitung ulang alokasi
pendapatan dan saldo modal untuk masing-masing dari tiga tahun tersebut.
P16-7
1. Assuming goodwill approach is used:
1. Partnership Fair Value ($1,800,000 / 40%) $ 4,500,000
Total equity of the partnership $ 3,250,000
Goodwill $ 1,250,000

Journal entry:
Goodwill (+A) $ 1,250,000
Kiyoshi Capital ($1,250,000 x 70%) 875,000
Masao Capital ($1,250,000 x 30%) 375,000
To record revaluation of partnership value

Capital balances after revaluation

Kiyoshi ($1,750,000 + 875,000) $ 2,625,000
Masao ($1,500,000 + 375,000) $ 1,875,000

Journal Entry :
Kiyoshi Capital ($2,625,000 x 40%) $ 1,050,000
Masao Capital ($1,875,000 x 40%) $ 750,000
Naoki Capital $ 1,800,000

To transfer Kiyoshi capital and Masao capital to Naoki capital

2. Schedule to allocate the capital balance

Capital Balances
Before Revaluation Revaluation After Revaluation Capital Transferred Capital After Transfer

Kiyoshi $ 1,750,000 $ 875,000 $ 2,625,000 $ (1,050,000) $ 1,575,000 35%

Masao $ 1,500,000 $ 375,000 $ 1,875,000 $ (750,000) $ 1,125,000 25%
Naoki $ 1,800,000 $ 1,800,000 40%
$ 3,250,000 $ 1,250,000 $ 4,500,000 $ - $ 4,500,000

Assuming bonus approach is used

1. Journal Entry :
Kiyoshi capital ($1,750,000 x 40%) 700,000
Masao capital ($1,500,000 x 40%) 600,000
Naoki Capital 1,500,000

To transfer Kiyoshi capital and Masao capital to Naoki capital

2. Schedule to allocate the capital balance

Capital Balances
Per Books Capital Transferred Capital After Transfer
Kiyoshi $ 1,750,000 $ (700,000) $ 1,050,000 32%
Masao $ 1,500,000 $ (600,000) $ 900,000 28%
Naoki $ 1,300,000 $ 1,300,000 40%
$ 3,250,000 $ - $ 3,250,000