ex 172 a wiggins l stokes and k hayes are forming a partnership wiggins is transferr 4325035

Ex. 172

A. Wiggins, L. Stokes, and K. Hayes are forming a partnership. Wiggins is transferring $75,000 of personal cash to the partnership. Stokes owns land worth $25,000 and a small building worth $120,000, which she transfers to the partnership. Hayes transfers to the partnership cash of $14,000, accounts receivable of $48,000 and equipment worth $28,000. The partnership expects to collect $45,000 of the accounts receivable.

Instructions

(a)    Prepare the journal entries to record each of the partners’ investments.

(b)    What amount would be reported as total owners’ equity immediately after the investments?

Ex. 173

S. Pellah (beginning capital, $80,000) and M. Berry (beginning capital $120,000) are partners. During 2017 the partnership earned net income of $90,000, and Pellah made drawings of $24,000 while Berry made drawings of $32,000.

Instructions

(a)Assume the partnership income-sharing agreement calls for income to be divided 40% to Pellah and 60% to Berry. Prepare the journal entry to record the allocation of net income.

(b)Assume the partnership income-sharing agreement calls for income to be divided with a salary of $40,000 to Pellah and $35,000 to Berry, with the remainder divided 40% to Pellah and 60% to Berry. Prepare the journal entry to record the allocation of net income.

(c)Assume the partnership income-sharing agreement calls for income to be divided with a salary of $50,000 to Pellah and $45,000 to Berry, interest of 10% on beginning capital, and the remainder divided 50%-50%. Prepare the journal entry to record the allocation of net income.

(d)Compute the partners’ ending capital balances under the assumption in part (c).

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