On February 1, 2020, Tessa Williams and Audrey Xie formed a partnership in Ontario. Williams contributed $89,000 cash and Xie contributed land valued at $129,000 and a small building valued at $189,000. Also, the partnership assumed responsibility for Xie’s $139,000 long-term note payable associated with the land and building. The partners agreed to share profit or loss as follows: Williams is to receive an annual salary allowance of $99,000, both are to receive an annual interest allowance of 12% of their original capital investments, and any remaining profit or loss is to be shared equally. On November 20, 2020, Williams withdrew cash of $69,000 and Xie withdrew $54,000. After the adjusting entries and the closing entries to the revenue and expense accounts, the Income Summary account had a credit balance of $169,000. Required: 1. Present general journal entries to record the initial capital investments of the partners, their cash withdrawals, and the December 31 closing of the Income Summary and withdrawals accounts. Record the initial capital investments. (Feb 01, 2020) Record the partners’ withdrawals. (Nov 20, 2020) Record the allocation of profit and close the Income summary account. (Dec 31, 2020) Record the entry to close withdrawals accounts. (Dec 31, 2020) 2. Determine the balances of the partners’ capital accounts as of the end of 2020. Williams: Xie:
On February 1, 2020, Tessa Williams and Audrey Xie formed a
Required:
1. Present general
Record the initial capital investments. (Feb 01, 2020)
Record the partners’ withdrawals. (Nov 20, 2020)
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