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                       Principles of Accounting B Exam                    

(2 Hours)

   Net income of ABC partnership for the year ended on 12/31/1999 is $53,400. Salary allowances of $12,000 for partner A, $18,000 for partner B, and $20,000 for partner C. Partnership agreement includes an interest rate of 10% on the beginning balances of the partners’ capital accounts (Beginning capital: A, $30,000; B, $40,000; and C, 60,000). Partners agreed that remaining net income or loss to be divided to partners equally.

Required:

1)      Prepare statement of division of partnership net income for year 1999.

2)      Record the entry to close the income summary account.

  The partnership of X, Y, and Z partners has ended its operations and is in the process of liquidation. All assets except for cash, accounts receivable and car have already been sold.  The tasks of collecting the accounts receivable and selling the car  are now to be carried out.  The general ledger balances are as follows:

            Accounts receivable                                                110,000

            Allowance for doubtful accounts                                            8,000

            Accounts payable                                                                        34,000

            Partner X, capital                                                                           40,000

            Partner Y, capital                                                                            45,000

            Partner Z, capital                                                                             28,000

- Profit-and-loss sharing ratio is X, 30%; Y, 30%; and Z, 40%.

- 20% of the gross amount of accounts receivable are collected.

- The car is sold for $12,000 in cash.

- Partner Z is insolvent.

Required: Record general journal entries to complete the liquidation process.

  The following transactions related to AAA Company’s long and short term investments in 1999:

- April 9:  AAA purchased 1,000 shares of Wimpy Co. (30%) for $70,000.

- May 8:  AAA purchased 2,000 shares of Mac Co. (2%) for $50,000.

- July 17: AAA purchased 1,000 shares of IBM Co. (1%) for $30,000.

- November 30: AAA received $7,000 cash dividends from Mac and  $4,000 cash dividends from IBM.

- December 31: Fair market value of AAA Company investments:

            Wimpy $80,000          Mac   $40,000                        IBM $35,000

 Required:

    Record journal entries for AAA Company and show portion of its balance sheet on 12/31/1999 relevant to the above investment transactions.