LeBron and Durant organize a partnership on January 1. LeBron’s initial net investment is $1,500. It consists of $350 cash, equipment with a market value of $1,650 (book value of $900), and a $500 note payable as a bank loan for the new business. Durant’s initial investment is cash of $800. Prepare journal entries for (1) LeBron’s investment and (2) Durant’s investment. (3) Record LeBron’s $100 cash withdrawal at year-end.
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
LeBron and Durant organize a
of $350 cash, equipment with a market value of $1,650 (book value of $900), and a $500 note payable as a
bank loan for the new business. Durant’s initial investment is cash of $800. Prepare
(1) LeBron’s investment and (2) Durant’s investment. (3) Record LeBron’s $100 cash withdrawal at year-end.
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