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1. Assume that two individuals agree to form a partnership. Partner A is contributing an operating business that reports the following balance sheet:

	.$ 60,000		Accounts payable.	$ 80,000
			Accrued liabilities
			Total liabilities	$140,000
Total assets	$240,000		Net assets

Partner B is contributing cash of $140,000. The partners agree that the initial capital of the partnership should be shared equally.

Required: Prepare the journal entry to record the capital contributions of the partners assuming that the partners wish to employ the Bonus Method.

2. Assume that Partners A and B each report a Capital Account of $450,000. Partner C wants to join the partnership as an equal one-third partner. Because the partnership has been very profitable, Partners A and B require Partner C to contribute $900,000 in cash to the partnership in return for a one-third interest. Assume that Partners A and B share profits 60% and 40%, respectively, prior to the admission of Partner C. After admission of Partner C, Partners A and B retain their relative proportion of profit allocation after granting Partner C a 30% profit-allocation interest.

Required: Use the Bonus Method to record the journal entry on the books of the partnership to reflect the admission of Partner C.

3. Assume that Partners A and B have Capital Accounts equal to $600,000 and $300,000, respectively. Partner C wants to join the partnership as one-third partner. Partner C contributes $1,275,000 in cash to the partnership in return for a one-third interest. Prior to the admission of Partner C, Partners A and B wish to revalue the long-term assets of the partnership. They obtain an appraisal of the land and building that indicated a current value of $1.5 million. The land and building are currently reported on the partnership balance sheet at $300,000.

Required: Record the journal entry on the books of the partnership to reflect the revaluation of the land and building and the admission of Partner C with a capital contribution of $1,275,000. Assume that despite the evidence of a previously unrecognized intangible asset, the partners do not wish to record the intangible asset. Assume that the partners allocate profits equally.

4. The ABC partnership reports the following condensed balance sheet:

Cash	$1,010,000		Liabilities	$1,600,000
Noncash assets	2,550,000		Partner A, capital	900,000
			Partner B, capital	900,000
			Partner C, capital	160,000
Total assets	$3,560,000		Total liabilities and partner capital	$3,560,000

The partners wish to liquidate the partnership. The noncash assets are sold for $2,000,000 with the loss distributed to the partners in the ratio of 30%/30%/40% to partner A, B, and C, respectively. The liabilities are paid in full. Partners make any capital contribution that is necessary to offset a negative balance in their respective Capital Accounts.

Required: Prepare a schedule detailing the liquidation of the assets, repayment of the liabilities, and distribution of the remaining cash to the partners.

5. Following is financial data for the Center for New Horizons, a not-for-profit organization promoting sustainable business operations:

	Unrestricted	Temporarily Restricted	Permanently Restricted
Revenues - Contributions	$1,288,000	$ 128,800	$20,700
Revenues - Investment	8,832	13,248	22,080
Net Assets, beginning of year	736000	506,000	184,000

Contributions Receivable	296,700
Expenses - Program	1,196,000
PPE, net	570,400
Depreciation expense	41,400
Long-term Liabilities	315,100
Cash	5,060
Payables	216,200
Investments	1,159,200
Net Assets Released from Restriction	92000
Expenses - Support	170,200

Required: Prepare the Statement of Activities and the Statement of Financial Position.

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