03 184 185 PART 10 186 187 Razul and Amy decided to start a partnership called RA Consulting on January 1, 2020. Each of them contributed a number of items to the partnership, which are listed below. All tangible assets are listed at their market value. 188 189 190 Razul Amy 191 Cash $40,000 Cash $60,000 192 Equipment 190,000 Furniture 70,000 193 Bank Loan 80,000 Accounts Payable 30,000 195 196 197 On March 1, Razul and Amy added a new partner to the business, Sheila. Sheila will contribute $100,000 and receive a 35% share of the business. Use the capital balances from January 1 to determine any bonuses. Assume the existing partners will split any bonus evenly 198 200 201 202 During the year, Razul and Amy withdrew $20,000 and $15,000 respectively and the business reported a net income of 203 $400,000. Their partnership agreement provided for sharing of net income (loss) on the following basis: 204 205 206 1. Salary of $60,000 is allocated to Razul, $50,000 to Amy, and $20,000 to Sheila. 2. Interest is allocated at 7% of each partner's opening capital balance. 3. Remainder is shared where Razul gets 40%, Amy gets 25%, and Sheila gets 35%. 207 -210 D H 210 211 a) Prepare the journal entries to record the contributions of each partner to start the partnership 8 Marks Date Account Title and Explanation Debit Credit 212 213 214 215 216 217 218 219 220 221 222 223 224 225 226 227 228 229 230 231 232 233 234 b) Prepare a schedule showing the changes in capital and ending capital balances after the admission of Sheila, 11 Marks Razul Amy Sheila Total 234 235 c) Prepare the journal entry to record the admission of the new partner on March 1. 4 Marks 236 237 238 239 Date Account Title and Explanation Debit Credit 240 241 242 243 244 245 246 d) Prepare the journal entry to record the partner withdrawals of cash. 3 Marks 247 248 249 250 251 Date Account Title and Explanation Debit Credit 252 253 254 255 256 257 258 e) Prepare a schedule showing the allocation of the net income to the partners. 12. Marks el Prepare a schedule showing the allocation of the net income to the partners 12 Marks Isaac Maxwell 00 03 Rarul Total $400,000 Amy Shella Net Income Change account 1 -- 10 Prepare the journal entries to record the distribution of net income and the closing of the withdrawal accounts Assume revenues and expenses have been closed to the income summary account 8 Maria 1 Date Account Title and explanation Debit Credit 5 . . 291 292 8) After dividing the income for the year all parties agreed to liquidate the partnership. The values of the assets and liabilities are shown below. The furniture is sold for $54,000 and all other assets are sold at their given values. Any gains or losses from liquidation are split evenly among all partners. 293 295 296 297 298 299 300 301 302 303 Cash Accounts Receivable Net Equipment Net Furniture Accounts Payable Bank Loan $482.000 50,000 247,000 84,000 36,000 112,000 16 Marks Prepare the journal entries to sell the assets, distribute any gains or losses to the partners, pay the liabilities and distribute the cash to the partners Date Account Title and Explanation Debit Credit 305 306 307 308 309 310 311 312 313 314 315