On March 1, Eckert and Kelley formed a partnership. Eckert contributed $92.000 cash, and Kelley contributed land valued at $73,600 and a bulding valued at $103.600. The partnership also took Kelley's $82000 long-term note payable associated with the land and bullding. The partners agreed to share Income as follows: Eckert gets an annual salary allowance of $30,000, both get an annual Interest allowance of 9% of their Initial capital Investment, and any remalning Income or loss Is shared equally. On October 20, Eckert withdrew $30,000 cash and Kelley withdrew $23,000 cash. After adjusting and closing entrles are made to the revenue and expense accounts at December 31, the Income Summary account had a credit balance of $76.000. Required: 1a. & 1b. Prepare journal entries to record the partners' initial capital Investments and their subsequent cash withdrawals. 1c. Determine the partners' shares of Income, and then prepare journal entries to close Income Summary and the partners' withdrawals accounts. 2 Determine the balances of the partners' capltal accounts as of December 31. Complete this question by entering your answers in the tabs below. Req 1A and 1B Req 10 Req 2 Determine the partners' shares of income, and then prepare journal entries to close Income Summary and the partners' withdrawals accounts. (Enter all allowances as positive values. Enter losses as negative values.) Allocation of Partnership Income Eckert Kelley Total Net Income $ 76,000 Salary allowances S 30,000 30,000 Balance of income 48,000 Interest allowances Balance of income Balance allocated equally Balance of income Shares of the partners S 30,000 S Date General Journal Debit Credit Record the entry to close the partners' withdrawals accounts. Eckert, Capital Kelley. Capital Dec 31 Eckert, Withdrawals Kelley, Withdrawals Record the entry to close the income summary account. Income summary Eckert, Capital Kelley. Capital Dec 31 76,000 < Req 1A and 1B Req 2 >
On March 1, Eckert and Kelley formed a partnership. Eckert contributed $92.000 cash, and Kelley contributed land valued at $73,600 and a bulding valued at $103.600. The partnership also took Kelley's $82000 long-term note payable associated with the land and bullding. The partners agreed to share Income as follows: Eckert gets an annual salary allowance of $30,000, both get an annual Interest allowance of 9% of their Initial capital Investment, and any remalning Income or loss Is shared equally. On October 20, Eckert withdrew $30,000 cash and Kelley withdrew $23,000 cash. After adjusting and closing entrles are made to the revenue and expense accounts at December 31, the Income Summary account had a credit balance of $76.000. Required: 1a. & 1b. Prepare journal entries to record the partners' initial capital Investments and their subsequent cash withdrawals. 1c. Determine the partners' shares of Income, and then prepare journal entries to close Income Summary and the partners' withdrawals accounts. 2 Determine the balances of the partners' capltal accounts as of December 31. Complete this question by entering your answers in the tabs below. Req 1A and 1B Req 10 Req 2 Determine the partners' shares of income, and then prepare journal entries to close Income Summary and the partners' withdrawals accounts. (Enter all allowances as positive values. Enter losses as negative values.) Allocation of Partnership Income Eckert Kelley Total Net Income $ 76,000 Salary allowances S 30,000 30,000 Balance of income 48,000 Interest allowances Balance of income Balance allocated equally Balance of income Shares of the partners S 30,000 S Date General Journal Debit Credit Record the entry to close the partners' withdrawals accounts. Eckert, Capital Kelley. Capital Dec 31 Eckert, Withdrawals Kelley, Withdrawals Record the entry to close the income summary account. Income summary Eckert, Capital Kelley. Capital Dec 31 76,000 < Req 1A and 1B Req 2 >
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter14: Partnerships And Limited Liability Entities
Section: Chapter Questions
Problem 14P
Related questions
Concept explainers
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.
Question
Transcribed Image Text:On March 1, Eckert and Kelley formed a partnership. Eckert contributed $92.000 cash, and Kelley contributed land valued at $73,600
and a bulding valued at $103.600. The partnership also took Kelley's $82000 long-term note payable associated with the land and
bullding. The partners agreed to share Income as follows: Eckert gets an annual salary allowance of $30,000, both get an annual
Interest allowance of 9% of their Initial capital Investment, and any remalning Income or loss Is shared equally. On October 20, Eckert
withdrew $30,000 cash and Kelley withdrew $23,000 cash. After adjusting and closing entrles are made to the revenue and expense
accounts at December 31, the Income Summary account had a credit balance of $76.000.
Required:
1a. & 1b. Prepare journal entries to record the partners' initial capital Investments and their subsequent cash withdrawals.
1c. Determine the partners' shares of Income, and then prepare journal entries to close Income Summary and the partners' withdrawals
accounts.
2 Determine the balances of the partners' capltal accounts as of December 31.
Complete this question by entering your answers in the tabs below.
Req 1A and 1B
Req 10
Req 2
Determine the partners' shares of income, and then prepare journal entries to close Income Summary and the partners'
withdrawals accounts. (Enter all allowances as positive values. Enter losses as negative values.)
Allocation of Partnership Income
Eckert
Kelley
Total
Net Income
$ 76,000
Salary allowances
S 30,000
30,000
Balance of income
48,000
Interest allowances
Balance of income
Balance allocated equally
Balance of income
Shares of the partners
S 30,000 S
Date
General Journal
Debit
Credit
Record the entry to close the partners' withdrawals accounts.
Eckert, Capital
Kelley. Capital
Dec 31
Eckert, Withdrawals
Kelley, Withdrawals
Record the entry to close the income summary account.
Income summary
Eckert, Capital
Kelley. Capital
Dec 31
76,000
< Req 1A and 1B
Req 2 >
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