The partnership of Angel Investor Associates began operations on January 1, 20Y5, with contributions from two partners as follows:Dennis Overton$180,000Ben Testerman120,000The following additional partner transactions took place during the year:1.  In early January, Randy Campbell is admitted to the partnership by contributing $75,000 cash for a 20% interest.2.  Net income of $150,000 was earned in 20Y5. In addition, Dennis Overton received a salary allowance of $40,000 for the year. The three partners agree to an income-sharing ratio equal to their capital balances after admitting Campbell.3.  The partners' withdrawals are equal to half of the increase in their capital balances from salary allowance and income.Prepare a statement of partnership equity for the year ended December 31, 20Y5.

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Asked Feb 1, 2020
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The partnership of Angel Investor Associates began operations on January 1, 20Y5, with contributions from two partners as follows:

Dennis Overton $180,000
Ben Testerman 120,000

The following additional partner transactions took place during the year:

1.  In early January, Randy Campbell is admitted to the partnership by contributing $75,000 cash for a 20% interest.

2.  Net income of $150,000 was earned in 20Y5. In addition, Dennis Overton received a salary allowance of $40,000 for the year. The three partners agree to an income-sharing ratio equal to their capital balances after admitting Campbell.

3.  The partners' withdrawals are equal to half of the increase in their capital balances from salary allowance and income.

Prepare a statement of partnership equity for the year ended December 31, 20Y5.

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Expert Answer

Definition

Accounting homework question answer, step 1, image 1

Working notes:

 Calculation of partner’s withdrawal:

Accounting homework question answer, step 2, image 1

Calculation of R’s admission:

Accounting homework question answer, step 2, image 2

Calculate the net income distribution:

Accounting homework question answer, step 2, image 3

Calculate the remaining income of the partners:

Accounting homework question answer, step 2, image 4

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