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Keith Williams and Brian Adams were students when they formed a partnership several years ago for a part-time business called Music Works. Adjusted trial balance information for the year ended December 31, 2020, appears below.   Account Balance*   Account Balance*   Accounts payable $ 9,800   Keith Williams, capital** $ 31,300   Accumulated depreciation   78,000   Keith Williams, withdrawals   53,000   Brian Adams, capital**   25,000   Note payable, due May 2022***   126,000   Brian Adams, withdrawals   63,000   Office supplies   19,000   Cash   211,600   Revenues   486,000   Equipment   306,000   Utilities payable   1,500   Expenses   105,000             *Assume all account balances are normal. **The partners made no investments during the year. ***$43,000 of the note payable is due in May 2021. Required: 1. Prepare calculations that show how the profit should be allocated to the partners assuming the partnership agreement states that profit/(losses) are to be shared by allowing a $93,000 per year salary allowance to Williams, a $153,000 per year salary allowance to Adams, and the remainder on a 3:2 ratio. (Leave no cell blank. Enter "0" when the answer is zero.)

Keith Williams and Brian Adams were students when they formed a partnership several years ago for a part-time business called Music Works. Adjusted trial balance information for the year ended December 31, 2020, appears below.   Account Balance*   Account Balance*   Accounts payable $ 9,800   Keith Williams, capital** $ 31,300   Accumulated depreciation   78,000   Keith Williams, withdrawals   53,000   Brian Adams, capital**   25,000   Note payable, due May 2022***   126,000   Brian Adams, withdrawals   63,000   Office supplies   19,000   Cash   211,600   Revenues   486,000   Equipment   306,000   Utilities payable   1,500   Expenses   105,000             *Assume all account balances are normal. **The partners made no investments during the year. ***$43,000 of the note payable is due in May 2021. Required: 1. Prepare calculations that show how the profit should be allocated to the partners assuming the partnership agreement states that profit/(losses) are to be shared by allowing a $93,000 per year salary allowance to Williams, a $153,000 per year salary allowance to Adams, and the remainder on a 3:2 ratio. (Leave no cell blank. Enter "0" when the answer is zero.)

Century 21 Accounting Multicolumn Journal
Century 21 Accounting Multicolumn Journal
11th Edition
ISBN:9781337679503
Author:Gilbertson
Publisher:Gilbertson
Chapter23: Accounting For Partnerships
Section23.2: Distribution Of Net Income And Owners’ Equity Statements
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Keith Williams and Brian Adams were students when they formed a partnership several years ago for a part-time business called Music Works. Adjusted trial balance information for the year ended December 31, 2020, appears below.
 

Account Balance*   Account Balance*  
Accounts payable $ 9,800   Keith Williams, capital** $ 31,300  
Accumulated depreciation   78,000   Keith Williams, withdrawals   53,000  
Brian Adams, capital**   25,000   Note payable, due May 2022***   126,000  
Brian Adams, withdrawals   63,000   Office supplies   19,000  
Cash   211,600   Revenues   486,000  
Equipment   306,000   Utilities payable   1,500  
Expenses   105,000          
 


*Assume all account balances are normal.
**The partners made no investments during the year.
***$43,000 of the note payable is due in May 2021.

Required:
1. Prepare calculations that show how the profit should be allocated to the partners assuming the partnership agreement states that profit/(losses) are to be shared by allowing a $93,000 per year salary allowance to Williams, a $153,000 per year salary allowance to Adams, and the remainder on a 3:2 ratio. (Leave no cell blank. Enter "0" when the answer is zero.) 

 

Williams Adams Total Profit Salary allowance Balance of profit to be allocated Balance allocated on a 3:2 ratio Balance of profit Shares of the partners 2. Prepare the journal entry to close the Income Summary account to the partners' capital accounts. View transaction list Journal entry worksheet 1 > Record the closing of profit to capital.
Transcribed Image Text:Williams Adams Total Profit Salary allowance Balance of profit to be allocated Balance allocated on a 3:2 ratio Balance of profit Shares of the partners 2. Prepare the journal entry to close the Income Summary account to the partners' capital accounts. View transaction list Journal entry worksheet 1 > Record the closing of profit to capital.
3. Prepare a statement of changes in equity and a classified balance sheet. MUSIC WORKS Statement of Changes in Equity For Year Ended December 31, 2020 Williams Adams Total Total MUSIC WORKS Balance Sheet December 31, 2020
Transcribed Image Text:3. Prepare a statement of changes in equity and a classified balance sheet. MUSIC WORKS Statement of Changes in Equity For Year Ended December 31, 2020 Williams Adams Total Total MUSIC WORKS Balance Sheet December 31, 2020
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