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What journal entry should the partnership have recorded on January 1, 2015

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In the early part of 2015, the partners of Hugh, Jacobs, and Thomas sought assistance from a local accountant. They had begun a new business in 2014 but had never used an accountant's services.;Hugh and Jacobs began the partnership by contributing $115,000 and $65,000 in cash, respectively. Hugh was to work occasionally at the business, and Jacobs was to be employed full time. They decided that year-end profits and losses should be assigned as follows;?;Each partner was to be allocated 10 percent interest computed on the beginning capital balances for the period.;?;A compensation allowance of $5,000 was to go to Hugh with a $21,000 amount assigned to Jacobs.;?;Any remaining income would be split on a 4:6 basis to Hugh and Jacobs, respectively.;In 2014, revenues totaled $140,000, and expenses were $125,000 (not including the compensation allowance assigned to the partners). Hugh withdrew cash of $7,000 during the year, and Jacobs took out $12,000. In addition, the business paid $7,000 for repairs made to Hugh?s home and charged it to repair expense.;On January 1, 2015, the partnership sold a 15 percent interest to Thomas for $69,000 cash. This money was contributed to the business with the bonus method used for accounting purposes.;c.;What journal entries should the partnership have recorded on December 31, 2014?;d.;What journal entry should the partnership have recorded on January 1, 2015?

 

Paper#20506 | Written in 18-Jul-2015

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