CONSTRUCTION, MISC Flashcards
What is the Journal Entry when you recover a receivable?
dr: A/R
cr: Allowance Acct
dr: Cash
cr: A/R
What is the JE to set up Allowance for Doubtful Accounts or Uncollectibles?
dr: Bad Debt Expense
cr: Allowance Acct
What is the JE to write off Receivables?
dr: Allowance Acct
cr: A/R
What is the JE to record partner buy in using the Bonus Method?
(Bonus Adjust Right - BAR)
dr: Cash 50
cr: Capital Ptr A 30
cr: Capital Ptr B 12
cr: Capital Ptr C 8
New Partner paying extra for buy in, or, existing partners issue bonus to partner
EXAMPLE of BONUS METHOD
Net Assets PtrA Ptr B New Ptr 1/6
130 30 100 –
+ 50 50
=180
x 1/6 12 8 (20) **
=30 30
** Plug is bonus to allocate to old ptrs only.
New ptr percentage x Net Assets =
New Ptr Balance AND New Ptr buy-in amt minus New Ptr Bal. = Bonus to exist. ptrs
EXAMPLE of GOODWILL METHOD
Net Assets Ptr A Ptr B New Ptr
130 100 30
+ 50 50/.20=300
=180
(120)*
=300
*Plug GW and allocate to old ptrs only.
Det new Adj. Cap Bal by dividing new buy in amt by new ptrs percntg.
Adj Cap Bal - Net Assets Bal = GW to allocate to old partners
Apply a partner ratio to allocate bonus
Use ratio to determine fraction or percentage of equity in partnership
Ex: Partners allocate profit 3:2
3+2 = 5
3/5 and 2/5 (or 60% and 40%)
Calculate Partnership’s New percentages with addition of a partner buying a 20% interest. Assume orignial ratio is 3:2.
Subtract new ptr’s percentage from 100 then
Multiply result by each ptrs original percentag
Partners were 60/40 = 100%
New ptr is 20%. 100 - 20 = 80%
80% x .60 = 48
80% x .40 = 32
JE for recording Goodwill (GW Method)
CASH 50
GOODWILL 120
CAPITAL A 72
CAPITAL B 48
CAPITAL C 50EXPLAIN CALCULATION FOR ALLOCATION
OF EARNINGS, PROFITS AND LOSSES IN A
PARTNERSHIP given the following:
Profits: shared equally
Losses: 60:40
Salaries: 55k: 45k
Earnings: 80,000
- Determine each partner’s portion of loss or gain beginning
a) Earnings - Salaries = Total Loss/Gain
b) Tot Loss/Gain x Ptr Prcntg = Ptr portion L/G.
Earnings total: 80,000
Less Salaries total 55+45 = (100,000)
a) Total Loss (20,000)
b) so, 60% of (20,000) = (12,000)
40% of (20,000) = (8,000)
next, Salary +/- gain or loss =
Alloc. of Earnings:
55,000 - 12,000 = 43,000 to Ptr A
45,000 - 8,000 = 37,000 to Ptr B
JOURNAL ENTRY
BONDS at ISSUANCE
CASH (amt to purchase)
BIC
DISCOUNT (plug)
BONDS PAYABLE (stated)
ACCRUED INT
PREMIUM (plug)
Cash Buys Diamonds
Bonneville Power Administration or BP Paid Alot
JOURNAL ENTRY
BONDS at RETIREMENT
BONDS PAYABLE (par - stated)
PREMIUM (unamortized)
LOSS (plug)
BIC
DISCOUNT
CASH (amount to retire)
GAIN (plug)
BP Paid Lots
Bics Don’t Come Green
CALCULATE COST FOR NEW PARTNER TO ENTER AT 1/6th
INTEREST, USING THE
EXACT METHOD
Net Assets PtrA Ptr B New Ptr
130 100 30
+ 26 (plug) no allocation 26 = 156
= 156
- Existing Cap Bal / (1 - new ptr prcnt) = New Cap Bal
- New Cap Bal - Prev. Cap Bal = Exact Buy In Cost
EX: 130 / (5/6) = 156
156 -130 = 26
JE for Exact Method
dr: Cash 26
cr: Capital New Ptr 26
Caluculate the capital balance in the partnership based on weighted average capital balance
(10% interest per year s/b credited to each partner on basis of weighted average capital balances)
Balance 1/1 140,000
Additional invstmt 7/1 40,000
Partner w/drawl 8/1 (15,000)
Balance 12/31 165,000
1-1 to 6-30 140,000 x 6/12 = 70,000
7-1 to 7/31 180,000 x 1/12 = 15,000
8/1 to 12/31 165,000 x 5/12 = 68,750
add totals 153,750
153,750 x .10 = interest to credit
Describe the Installment Method
WHY - Used when risk of loss from nonpayment exists.
WHAT: Recognition of some part of the sale is deferred.
WHEN:- Payment over more than one tax year
HOW: (to calc. Gross Profit Realized)
1.) Determine Gross Profit Percentage on sale
2.) Multiply GPP x Amts Collected
= Gross Profit Realized
