It is that form of organization which is owned and managed by two or more persons who invest and share the profits and losses according to a pre-determined ratio.
Forming a Partnership
While forming the partnership, the contribution of assets by partners are debited to the partnership assets account; whereas the liabilities of the partnerships are credited to the partnership’s liabilities account, and the net amount of the investments of partners are credited to the partners’ individual capital account.
To record: The journal entry for K and W’s investment in the partnership.
To prepare: The balance sheet on March 1, 20Y8, on the date of formation of partnership.
To provide: The journal entries to close the revenues and expenses and drawing accounts at February 28, 20Y9.
Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*
*Response times may vary by subject and question complexity. Median response time is 34 minutes for paid subscribers and may be longer for promotional offers.