2019

February 1 - Lowery and Siakam decide to start up a partnership. Lowery brings in $20 000 cash and equipment costing $50 000, with $10 000 in the accumulated depreciation account. The fair market value of the equipment is $40 000. Siakam brings $50 000 in cash. They agree to an income ratio of 3:2. There will be no salary.

December 31 - The business records a net income of $60 000, and Lowery has a debit balance of $15,000 in his drawings account. Liabilities are $10,500.

a) Record the journal entry to establish the partnership.

b) Record the entry to allocate the net income to the partners' capital accounts.

c) Prepare a Statement of Partners' Equity for the Year Ended December 31, 2019.

d) Prepare a partial Balance Sheet showing the Liabilities and Partners Equity for December 31, 2019.

2020

January 1 - VanVleet joins the partnership by contributing $50 000 in cash. A new partnership agreement is drawn up. Lowery, Siakam and VanVleet agree to salaries of $6,000 for each partner and a 5:4:3 income ratio.

December 31 - The business recorded a net income of $40,000. Lowery had drawings of

$25,000 and Siakam had drawings of $10,000.

a) Record the entry to admit the new partner into the business.

b) Record the entry to allocate the net income to the partners' capital accounts.

c) Prepare a Statement of Partners' Equity for 2020.

2021

January 1 - Siakam decides to leave the partnership. VanVleet agrees to pay Siakam $72,000 in a private transaction for his entire share in the business. The result is that all of Siakam's equity will be transferred to VanVleet. The income or loss will now be divided equally (50-50) between Lowery and VanVleet. There will be no salary.

December 31 - The business recorded a net loss of $40,000. There were no drawings. Show the entry to allocate the net income to the partners' capital accounts. Prepare a Statement of Partners' Equity for 2021.

a) Prepare the entry to record the departure of Siakam.

b) Record the entry to allocate the net income to the partners' capital accounts.

c) Prepare a Statement of Partners' Equity for 2021.

2022

January 1 The partners decide to liquidate the partnership. They have the following balances:

• Cash $145,500
• Accounts Receivable $4,500
• Equipment $ 40,000
• Accumulated Depreciation $10,000
• Accounts Payable $10,000

The partners were able to collect $4,500 of the accounts receivable and sell the equipment for $20,000.

a) Record all journal entries to dissolve the partnership.