Question 1: Newland and Palermo form a partnership. Newland contributes land with a book value of $50,000 and a fair value of $60,000. Newland also contributes equipment with a book value of $52,000 and a fair value of $57,000. The partnership assumes a $20,000 mortgage on the land. What should be the balance in Newland's capital account upon formation of the partnership?
Newland Capital Account = $
Question 2: M. Elston and R. Ogle have partnership capital balances of $40,000 and $80,000, respectively. The partnership agreement indicates that net income or net loss should be shared equally. If net income for the partnership is $42,000, how should the net income be divided?
The net income should be divided as $________ to M. Elston and $ _________ to R. Ogle.
Problem: On December 31, the capital balances and income ratios in TEP Company are as follows.
Journalize the withdrawal of Posada under each of the following assumptions. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
(1) Each of the continuing partners agrees to pay $18,600 in cash from personal funds to purchase Posada's ownership equity. Each receives 50% of Posada's equity.
(2) Emig agrees to purchase Posada's ownership interest for $23,000 cash.
(3) Posada is paid $34,100 from partnership assets, which includes a bonus to the retiring partner.
(4) Posada is paid $20,980 from partnership assets, and bonuses to the remaining partners are recognized.
If Emig's capital balance after Posada's withdrawal is $38,890, what were
(1) the total bonus to the remaining partners and
(2) the cash paid by the partnership to Posada?
Brief Exercise: PFW Co. reports net income of $57,000. Partner salary allowances are Pitts $10,000, Filbert $7,100, and Witten $7,900. Indicate the division of net income to each partner, assuming the income ratio is 60:20: 20, respectively.