On March 2, 2016, Zoe Moreau, Karen Krneta, and Veronica Visentin start a partnership to operate a
Question:
On March 2, 2016, Zoe Moreau, Karen Krneta, and Veronica Visentin start a partnership to operate a personal coaching and lifestyle consulting practice for professional women. Zoe will focus on work-life balance issues, Karen on matters of style, and Veronica on health and fitness. They sign a partnership agreement to split profits in a 3:2:3 ratio for Zoe, Karen, and Veronica, respectively. The following are the transactions for MKV Personal Coaching:
2016
Mar. 2 The partners contribute assets to the partnership at the following agreed amounts:
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They also agree that the partnership will assume responsibility for Karen's note payable of $5,000.
Dec. 20 Zoe, Karen, and Veronica each withdraw $30,000 cash as a "year-end bonus." No other withdrawals were made during the year.
31 Total profit for 2016 was $110,000.
2017
Jan. 5 Zoe and Veronica approve Karen's request to withdraw from the partnership for personal reasons. They agree to pay Karen $15,000 cash from the partnership.
6 Zoe and Veronica agree to change their profit-sharing ratio to 4:5, respectively.
Dec. 20 Zoe and Veronica withdraw $42,750 and $45,000 cash, respectively, from the partnership.
31 Total profit for 2017 was $123,750.
Zoe and Veronica agree to admit Dela Hirjikaka to the partnership. Dela will focus on providing training in organizational skills to clients. Dela invests $31,000 cash for 25% ownership of the partnership.
Instructions
(a) Record the above transactions. For the profit earned each year, calculate how it is to be allocated and record the closing of the Income Summary account.
(b) Prepare the partners' equity section of the balance sheet after Dela is admitted to the partnership.
TAKING IT FURTHER
Every time a new partner is admitted to a partnership or a partner withdraws from a partnership, it is necessary to completely close the accounting records of the existing partnership and start new accounting records for the new partnership. Do you agree or disagree? Explain.
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...
Step by Step Answer:
a 2016 Mar 2 Cash 15000 Equipment 18000 Z Moreau Capital 33000 2 Cash 10000 Furniture 17000 Notes Payable 5000 K Krneta Capital 22000 2 Cash 20000 Equipment 13000 V Visentin Capital 33000 Dec 20 Z Mor...View the full answer
Accounting Principles
ISBN: 978-1119048473
7th Canadian Edition Volume 2
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak
