Roger and Serena had been competitors and have decided to combine their independent businesses to form RS Amicability Ltd, as from January 2021. The partnership agreement set out the following basic arrangements: • Roger to contribute $87,500 motor vehicle and $4,500 in cash, and to act as managing partner at a salary of $33,750 per year. • Serena to contribute machinery valued at $63,000 and computers of $6,000. The partnership also assumes $18,000 debentures brought by Serena. • Interest for the period is to be allowed to the partners at the rate of 5% p.a. on their original capital contributions. Serena withdrew $6,000 on 1 September 2021, and interest at 10% p.a. to be charged on her drawings. • Residual profits or losses to be shared among Roger and Serena in the proportion of 2:3 respectively. Required a) Prepare the journal entries necessary to open the records of the partnership. b) Assuming in the first year that the partnership makes a profit of $105,000, prepare the journal entries to record the allocation of profit for the year ended 31 December 2021, using Method 2. Ignore GST and narrations are NOT required.
Roger and Serena had been competitors and have decided to combine their independent businesses to form RS Amicability Ltd, as from January 2021. The partnership agreement set out the following basic arrangements: • Roger to contribute $87,500 motor vehicle and $4,500 in cash, and to act as managing partner at a salary of $33,750 per year. • Serena to contribute machinery valued at $63,000 and computers of $6,000. The partnership also assumes $18,000 debentures brought by Serena. • Interest for the period is to be allowed to the partners at the rate of 5% p.a. on their original capital contributions. Serena withdrew $6,000 on 1 September 2021, and interest at 10% p.a. to be charged on her drawings. • Residual profits or losses to be shared among Roger and Serena in the proportion of 2:3 respectively. Required a) Prepare the journal entries necessary to open the records of the partnership. b) Assuming in the first year that the partnership makes a profit of $105,000, prepare the journal entries to record the allocation of profit for the year ended 31 December 2021, using Method 2. Ignore GST and narrations are NOT required.
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
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Transcribed Image Text:Roger and Serena had been competitors and have decided to combine their independent businesses to form RS Amicability Ltd, as from January
2021. The partnership agreement set out the following basic arrangements:
• Roger to contribute $87,500 motor vehicle and $4,500 in cash, and to act as managing partner at a salary of $33,750 per year.
• Serena to contribute machinery valued at $63,000 and computers of $6,000. The partnership also assumes $18,000 debentures brought by
Serena.
• Interest for the period is to be allowed to the partners at the rate of 5% p.a. on their original capital contributions. Serena withdrew $6,000 on 1
September 2021, and interest at 10% p.a. to be charged on her drawings.
• Residual profits or losses to be shared among Roger and Serena in the proportion of 2:3 respectively.
Required
a) Prepare the journal entries necessary to open the records of the partnership.
b) Assuming in the first year that the partnership makes a profit of $105,000, prepare the journal entries to record the allocation of profit for the
year ended 31 December 2021, using Method 2.
Ignore GST and narrations are NOT required.
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