Clipboard Font Alignment B4 Po 13500 1,400 A D E F 1 Below is the adjusted trial balance for Pearson, Specter and Litt at December 31, 2020. 2. The partnership began on January 1, 2020 and this is the year-end numbers. 3 4 Accounts payable 13,500 5 Accounts receivable 41,800 6 Accumulated amortization, patent 6,000 7 Accumulated depreciation, fixture 3,000 8 Accumulated depreciation, furniture 6,000 9 Allowance for doubtful accounts 10 Amortization expense, patent 2,000 11 Bad debt expense 2,700 12 Cash 32,250 13 Depreciation expense, fixtures 3,000 14 Depreciation expense, furniture 6,000 15 Fixtures 32,000 16 Furniture 72,000 17 Jane Pearson, capital 83,100 18 Jane Pearson, withdrawals 22,700 19 Hans Specter, capital 71,550 20 Hans Specter, withdrawals 23,300 21 Larry Litt, capital 65,100 22 Larry Litt, withdrawals 41,600 23 Merchandise inventory 22,500 24 Notes payable, due 2023** 15,000 25 Patent 22,000 26 Prepaid rent 18,000 27 Rent expense 84,000 28 Sales 221,000 29 Sales discounts 6,100 30 Sales returns and allowances 5,800 31 Unearned sales 3,100 32 Wages expense $1,000 33 34 Create the income statement for the year ended December 31, 2020. 35 Complete the closing entries for Steps 1 and 2. (Second tab) 36 37 Prepare calculations showing how the profit should be allocated to the partners under 38 each of the following plans for sharing profit and losses: (Third tab) Partnership Assign #1 Dec 31 IS and Closing 1 and 2 Profit or Loss Sharing f 13500 B D C E Larry Litt, withdrawals 41,600 Merchandise inventory 22,500 Notes payable, due 2023** 15,000 5 Patent 22,000 Prepaid rent 18,000 7 Rent expense 84,000 8 Sales 221,000 9 Sales discounts 6,100 Sales returns and allowances 5,800 1 Unearned sales 3,100 2 Wages expense 51,000 3 4 Create the income statement for the year ended December 31, 2020. 55 Complete the closing entries for Steps 1 and 2. (Second tab) 36 37 Prepare calculations showing how the profit should be allocated to the partners under 38 each of the following plans for sharing profit and losses: (Third tab) 39 a. The partners failed to agree on a method of sharing profit. b. The partners agreed to share profits and losses in proportion to their initial investments. 41 c. The partners agreed to share profit and losses in a 6:2:2 ratio. d. They agreed to share profits/(losses) by providing yearly salary 43 allowances of $40,000 to Pearson and $25,000 to Specter, 10% 44 interest allowances on their initial capital investments, and 45 sharing the remainder equally. 46 e. Record the journal entry from your calculations in d. 47 f. Step 3: Present the journal entry based on your calculations above. g. Step 4: Prepare the journal entry to close out the withdrawal accounts: 49 h. Calculate the closing capital balances for each partner at the end 50 of the year once all the closing entries have been completed. 51 Use the profit/loss allocation you did in d. and created journal 52 entries for as the profit/loss method selected. 53 40 12 48 54 55 56 57 58 59
