【正文】 = $3000 PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 53 Williams, Capital 19 000 Wu, Capital 3 000 White, Capital 3 000 Cash 25 000 (Withdrawal of and bonus to Williams) Payment from partnership assets continued 3. Bonus to remaining partners ? May occur when – Partnership has poor earnings record – Partner is anxious to leave partnership ? Example – Williams is paid on $16 000 for her $19 000 equity PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 54 Payment from partnership assets continued – Process involves ? Determining amount of bonus $19 000 $16 000 = $3000 ? Allocating bonus to remaining partners on basis of profitandloss ratio Wu $3000 x 189。 2020 John Wiley amp。 allocate gain to partners) Payment from partnership assets continued ? Statement of financial position after adjusting entries: ? Three accounting possibilities: 1 Withdrawal at carrying amount of the partner’s owners equity 2 Bonus to retiring partner 3 Bonus to remaining partners PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 50 Cash $ 22 000 Total Liabilities $ 55 000 Inventory 27 000 Wu, Capital 40 000 Equipment 25 000 White, Capital 29 000 Less Accum. Depn 5 000 20 000 Williams, Capital 19 000 Land 74 000 . Total Assets $143 000 Total liab. amp。 OE Cash 5000 Notes payable 15000 acc rec 15000 A/C payable 16000 inventory 18000 Adam 15000 equipment 35000 Carey 17800 acc depre (8000) East 1200 65000 65000 Profit sharing ratio 3:2:1 An example of Liquidation of Partnership ? Under no capital deficiency (P. 550) 1. Sell all non cash assets for $75,000 Enter the difference of $15,000 into an realisation account 2. Distribute the realisation to all partner according to profit ratio 3. Pay off all liabilities with cash 4. Work out the capital account of each partners and distribute remaining cash to the partners Done Liquidation (cont.) ? Under capital deficiency (P. 551 552) (let’s assume the non cash assets can only be sold for $42020) 1. Sell all non cash assets for $42,000 Enter the difference of $18,000 into an realisation account on debit balance 2. Distribute the realisation to all partner according to profit ratio 3. Pay off all liabilities with cash 4. Work out the capital account of each partners and distribute cash to the Adam and Carey only. East got a debit bal in his capital and he is required to contribute a sum of $1800 to the Partners Liquidation (cont.) ? Under capital deficiency (P. 553) (let’s assume the non cash assets can only be sold for $42020 and non payment of deficiency occur) 1. Sell all non cash assets for $42,000 Enter the difference of $18,000 into an realisation account on debit balance 2. Distribute the realisation to all partner according to profit ratio 3. Pay off all liabilities with cash 4. Work out the capital account of each partners 5. As East is unable to pay the $1800, this amount would be bear by Adam and Carey in the ratio of 46% to 54% (15000:17800) Liquidation (cont.) 64 Suggested questions to ensure your lecture understanding Chapter 13: ? Questions 5,14,15,19 ? , , ? , , , ? , , ? , 。 equity $131 000 Payment from partnership assets continued – Valuer assesses ? inventory at $27 000 ? land at $74 000 – Adjusting entries PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 49 Wu, Current ($3000 x 1/3) 1 000 White, Current ($3000 x 1/3) 1 000 Williams, Current ($3000 x 1/3) 1 000 Inventory 3 000 (Revalue inventory amp。s drawing account and CR each partner’s drawing account for the same amount PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 16 Dividing profit or loss continued – Example ? Partnership profit for year is $32 000 ? Partners share profit and loss equally PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 17 L. Cooke, Current 8 000 D. Kam, Current 6 000 L. Cooke, Drawings 8 000 D. Kam, Drawings 6 000 (To close drawings accounts to current accounts) Profit and Loss Summary 32 000 L. Cooke, Current ($32 000 x 50%) 16 000 D. Kam, Current ($32 000 x 50%) 16 000 (To transfer profit to partners’ current accounts) Dividing profit or loss continued Profitandloss ratios Typical profitand loss ratios include: 1 A fixed ratio – expressed as a proportion (6:4), a percentage (70% and 30%), or a fraction (2/3 and 1/3) 2 A ratio based on either: – capital balances at beginning of year or – average capital balances during year PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 18 Dividing profit or loss continued 3 Salaries to partners and the remainder on a fixe