ACC 112 L2A2 & ACC 112 L2A4

David Fire and Chip Ice form a partnership, investing $56,000 and $112,000 respectively. Determine their shares of net income or net loss for each of the following situations:

a. Net loss is $84,000 and the partners have no written partnership agreement.

b. Net income is $126,000, and the partnership agreement states that the partners share profits and losses on the basis of their capital contributions.

c. Net income is $138,000. The first $84,000 is shared on the basis of partner capital contributions. The next $42,000 is based on partner service with Fire receiving 40% and Ice receiving 60%. The remainder is shared equally. 

After the books are closed, Ying & Yang's partnership balance sheet reports capital of $80,000 for Ying and $120,000 for Yang. Ying is withdrawing from the firm. The partners agree to write down partnership assets by $75,000. They have shared profits and losses in the ratio of 2/5 to Ying and 3/5 to Yang. The partnership agreement states that a withdrawing partner will receive assets equal to the book value of his owners equity.

a.) How much will Ying receive? Ying will continue to operate the business as a proprietorship.

b.) What is Ying's beginning capital on the books of his new proprietorship?