Draper and Becker decide to organize a partnership. Draper invests $25,000 cash, and Becker contributes $5,000 and equipment having a book value of $7,000 and a fair value of $15,000.
Prepare the entry to record each partner’s investment.
Sonoma Company and Woodberry Company decide to merge their proprietorships into a partnership called Sonberry Company. The balance sheet of Woodberry Company shows:
Less: Allowance for doubtful accounts 1,500$16,500
Less: Accumulated depreciation—equip. 10,000$10,000
The partners agree that the net realizable value of the receivables is $16,000 and that the fair value of the equipment is $15,000.
Indicate how the four accounts should appear in the opening balance sheet of the partnership.
The Fig & Olive Co. reports net income of $24,000. Interest allowances are Fig $3,000 and Olive $5,000; partner salary allowances are Fig $18,000 and Olive $10,000 and the remainder is shared equally.
Indicate the division of net income to each partner, and prepare the entry to distribute the net income.
Southern Skies Co. had beginning capital balances on January 1, 2017, as follows: Patty Sharp $30,000 and Jim O’Connor $25,000. During the year, drawings were Sharp $15,000 and O’Connor $8,000. Net income was $40,000, and the partners share income equally.
Prepare the partners’ capital statement for the year.
After liquidating noncash assets and paying creditors, account balances in the Main Co. are Cash $29,000, Art, Capital (Cr.) $11,000, Bob, Capital (Cr,) $8,000 and Cam, Capital (Cr.) $10,000. The partners share income equally.
Journalize the final distribution of cash to the partners.