16 The partnership of Jordan and O'Neal began business on January 1, 20x7. Each partner contributed the following assets (the noncash assets are stated at their fair values on January 1, 20x7): 5.88 points Cash Inventories Land Equipment Jordan $ 60,900 81,800 -0- 100,300 O'Neal $ 51,800 -0- 130,700 -0- eBook Print References The land was subject to a $50,300 mortgage, which the partnership assumed on January 1, 20x7. The equipment was subject to an installment note payable that had an unpaid principal amount of $21,100 on January 1, 20X7. The partnership also assumed this note payable. Jordan and O'Neal agreed to share partnership income and losses in the following manner: Interest on beginning capital balances Salaries Remainder Jordan 3% $12, 200 60% O'Neal 3% $12,200 408 During 20X7, the following events occurred: 1. Inventory was acquired at a cost of $30,300. At December 31, 20X7, the partnership owed $6,700 to its suppliers. 2. Principal of $6,700 was paid on the mortgage. Interest expense incurred on the mortgage was $2,000, all of which was paid by December 31, 20x7. 3. Principal of $3,400 was paid on the installment note. Interest expense incurred on the installment note was $1,800, all of which was paid by December 31, 20X7. 4. Sales on account amounted to $162,500. At December 31, 20X7, customers owed the partnership $22,800. 5. Selling and general expenses, excluding depreciation, amounted to $35,000. At December 31, 20x7, the partnership owed $6,600 of accrued expenses. Depreciation expense was $6,200. 4. Sales on account amounted to $162,500. At December 31, 20X7, customers owed the partnership $22,800. 5. Selling and general expenses, excluding depreciation, amounted to $35,000. At December 31, 20X7, the partnership owed $6,600 of accrued expenses. Depreciation expense was $6,200. 6. Each partner withdrew $290 each week in anticipation of partnership profits. 7. The partnership's inventory at December 31, 20X7, was $20,200. 8. The partners allocated the net income for 20x7 and closed the accounts. Additional Information On January 1, 20X8, the partnership decided to admit Hill to the partnership. On that date, Hill invested $112,460 of cash into the partnership for a 20 percent capital interest. Total partnership capital after Hill was admitted totaled $462,000. Required: a. Prepare journal entries to record the formation of the partnership on January 1, 20X7, and to record the events that occurred during 20X7. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round the final answers to nearest dollar amount.) View transaction list View journal entry worksheet X No Transaction General Journal Debit Credit 1 a. Inventory Cash Accounts payable X A L Record the inventory purchase for cash and on account. B Record the payment of principal and the interest on the mortgage. C Record the payment of the principal and interest on the installment note. D Record the sales on account. Crec E Record the selling and administration expense. F Record the depreciation expense. G Record the drawings by the partners. Note : = journal entry has been entered F Record the depreciation expense. G Record the drawings by the partners. H Record the transfer of sales to the income summary. I Record the cost of goods sold. C J Close the expense accounts to income summary. K Record the transfer of income to the partners. L Record the transfer of the drawings by the partners to their respective capital accounts. Note : journal entry has been entered b. Prepare the income statement for the Jordan-O'Neal Partnership for the year ended December 31, 20X7. JORDAN O'NEAL PARTNERSHIP Income Statement For the Year Ended December 31, 20X7 Less: Cost of Goods Sold: Goods Available for Sale $ 0 o Gross Profit $ 0 0 0 Net Income 0 c. Prepare a balance sheet for the Jordon-O'Neal Partnership at December 31, 20x7. (Round the final answers to amount.) JORDAN O'NEAL PARTNERSHIP Balance Sheet At December 31, 20X7 Assets Total Assets $ 0 Liabilities and Capital Liabilities: Total liabilities $ 0 Capital: Total liabilities 0 Capital: 0 Total capital Total Liabilities and Capital $ 0 d. Prepare the journal entry for the admission of Hill on January 1, 20X8. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet A Record the entry for the admission of Hill on January 1, 20X8. Note: Enter debits before credits. Event General Journal Debit Credit 1 Record entry Clear entry View general journal