On January 1, 2022, Angel Martinez and Lourdes Medina formed the M&M Partnership. Upon formation, Martinez and Medina contributed $45,000 and $37,000, respectively. During its fiscal year ending on December 31, 2022, M&M earned $250,000 of revenue and incurred $264,000 of expenses. Martinez withdrew $8,000 and Medina withdrew $9,000 during 2022. The partners have agreed to divide income/(loss) by allocating interest of 9% on their original investments, salary allowances of $32,000 to Martinez and $25,000 to Medina, and the remainder shared in the ratio of 3:7 (Martinez to Medina). Required: 1. Prepare a detailed calculation of the amount of income/(loss) allocated to each partner. 2. Prepare the journal entry on December 31, 2022, to close the revenues and expenses to the individual partner equity accounts. Journal entry descriptions are NOT required. 3. Prepare the journal entry on December 31, 2022, to close the drawings to the individual partner equity accounts. Journal entry descriptions are NOT required.
On January 1, 2022, Angel Martinez and Lourdes Medina formed the M&M Partnership. Upon formation, Martinez and Medina contributed $45,000 and $37,000, respectively. During its fiscal year ending on December 31, 2022, M&M earned $250,000 of revenue and incurred $264,000 of expenses. Martinez withdrew $8,000 and Medina withdrew $9,000 during 2022. The partners have agreed to divide income/(loss) by allocating interest of 9% on their original investments, salary allowances of $32,000 to Martinez and $25,000 to Medina, and the remainder shared in the ratio of 3:7 (Martinez to Medina). Required: 1. Prepare a detailed calculation of the amount of income/(loss) allocated to each partner. 2. Prepare the journal entry on December 31, 2022, to close the revenues and expenses to the individual partner equity accounts. Journal entry descriptions are NOT required. 3. Prepare the journal entry on December 31, 2022, to close the drawings to the individual partner equity accounts. Journal entry descriptions are NOT required.
College Accounting, Chapters 1-27
23rd Edition
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:HEINTZ, James A.
Chapter19: Accounting For Partnerships
Section: Chapter Questions
Problem 3SEB
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Transcribed Image Text:On January 1, 2022, Angel Martinez and Lourdes Medina formed the M&M Partnership. Upon
formation, Martinez and Medina contributed $45,000 and $37,000, respectively. During its fiscal
year ending on December 31, 2022, M&M earned $250,000 of revenue and incurred $264,000 of
expenses. Martinez withdrew $8,000 and Medina withdrew $9,000 during 2022. The partners
have agreed to divide income/(loss) by allocating interest of 9% on their original investments,
salary allowances of $32,000 to Martinez and $25,000 to Medina, and the remainder shared in
the ratio of 3:7 (Martinez to Medina).
Required:
1. Prepare a detailed calculation of the amount of income/(loss) allocated to each partner.
2. Prepare the journal entry on December 31, 2022, to close the revenues and expenses to
the individual partner equity accounts. Journal entry descriptions are NOT required.
3. Prepare the journal entry on December 31, 2022, to close the drawings to the individual
partner equity accounts. Journal entry descriptions are NOT required.
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