ACCOUNTING FOR PARTNERSHIPS: 4 Questions On March 1, 2011, Abbey and Dames formed a partnership. Abbey contributed $88,000 cash and Dames contributed land valued at $70,000 AND a building valued at $100,000. The partnership also assumed responsibility for Dames $80,000 long-term note payable associated with the land and building. The partners agree to share income as follows: Abbey is to receive an annual interest allowance of 10% of their beginning-year capital investment, and any REMAINING income or loss is to be shared equally. On October 20, 2011, Abbey withdrew $32,000 cash and Dames withdrew $25,000 cash. After adjusting and closing entries are made to the revenue and expense accounts at December 31st, 2011, the Income Summary Account had a credit balance of $79,000. Prepare Journal Entries to record ? The partners? capital investments ? Their cash withdrawals ? The December 31 closing of both the Withdrawals and Income Summary accounts. ? Determine the balances of the partners? CAPITAL accounts as of December 31, 2011 Cosmo and Ellis began a partnership by investing $50,000 and $75,000, respectively. They agreed to share net income and loss by granting annual allowances of $55,000 to Cosmo and $45,000 to Ellis, 10% interest allowances on their investments, and any remaining balance shared equally. ? Determine the partners? shares of Cosmo and Ellis given a first year net income of $94,000. ? Determine the partner?s shares of Cosmo and Ellis given a first year net loss of $15,700. The treed Partnership has total partner?s equity of $510,000, which is made up of Elm, Captial, $400,000, and Oak, Capital, $110,000. The partners share net income and loss in a ratio of 80% to Elm and 20% to Oak. On November 1, Ash is admitted to the partnership and given a 15% interest in equity and a %15 share in any income and loss. Prepare the journal entry to record the admission of Ash under each of the following separate assumptions: Ash invests cash of: ? $90,000 ? $125,000 ? $60,000 Allocation Partnership Income: Kim Ries, Tere Bax, and josh Thomas invested $40,000, $56,000, and $64,000 respectively, in a partnership. During its first calendar year, the firm earned $124,500. Prepare a journal entry to close the firm?s Income Summary account as of its December 31 year-end and to allocate the $124,500 net income to the partners under each of the following separate assumptions: The partners: ? Have no agreement on the method of sharing income and loss. ? Agreed to share income and loss in the ratio of their beginning capital investments. ? Agreed to share income and loss by providing annual salary allowances of $33,000 to Ries, $28,000 to Bax, and $40,000 to Thomas; granting 10% interest on the partners? beginning capital investments; and sharing the remainder equally.
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