Exercise 12-7 Journalizing partnership transactions LO P2 On March 1, Eckert and Kelley formed a partnership. Eckert contributed $73,000 cash, and Kelley contributed land valued at $58 and a building valued at $88,400. The partnership also took Kelley's $63,000 long-term note payable associated with the land a building. The partners agreed to share income as follows: Eckert gets an annual salary allowance of $29,500, both get an annua interest allowance of 10% of their initial capital investment, and any remaining income or loss is shared equally. On October 20, E withdrew $30,000 cash and Kelley withdrew $23,000 cash. After adjusting and closing entries are made to the revenue and exp accounts at December 31, the Income Summary account had a credit balance of $78,000. Required: 1a. & 1b. Prepare journal entries to record the partners' initial capital investments and their subsequent cash withdrawals. 1c. Determine the partners' shares of income, and then prepare journal entries to close Income Summary and the partners' withdr 2. Determine the balances of the partners' capital accounts as of December 31 accounts Complete this question by entering your answers in the tabs below. Req 1A and 1B Reg 10 Req 2 Determine the partners' shares of income, and then prepare journal entries to close Income Summary and the partners' withdrawals accounts. (Enter all allowances as positive values. Enter losses as negative values.) Allocation of Partnership Income Eckert Kelley Total $ 78,000 29,500 $ 29,500 $ 0 Net Income Salary allowances Balance of income Interest allowances 0 Exercise 12-10 Sale of partnership interest LO P3 Biz Partnership allows partner Mandy to sell her $88,000 equity in the partnership to Brittney Brittney pays Mandy $70,400. Record the partnership's journal entry for the sale of Mandy's interest to Brittney on September 30. View transaction list Journal entry worksheet Record the admission of Brittney as a partner who will pay Mandy $70,400 for her share of equity of $88,000. Note: Enter debits before credits. General Journal Debit Credit Date Sept 30 View general journal Clear entry Record entry saved Exercise 12-11 Admission of new partner LO P3 The Struter Partnership has total partners' equity of $360,000, which is made up of Main, Capital, $252,000, and Frist, Capital, $108,000. The partners share net income and loss in a ratio of 83% to Main and 17% to Frist. On November 1, Adison is admitted to the partnership and given a 20% Interest in equity and a 20% share in any income and loss Prepare journal entries to record the admission of Adison for a 20% interest in the equity and a 20% share in any income and loss under independent assumption and loss (1) Record the admission of Adison with an investment of $90.000 for a 20% interest in the equity and a 20% share in any income (2) Record the admission of Adison with an investment of $125.000 for a 20% interest in the equity and a 20% share in any income and loss (3) Record the admission of Adison with an investment of $60,000 for a 20% interest in the equity and a 20% share in any income and loss. View transaction list Journal entry worksheet B Record the admission of Adison with an investment of $90,000 for a 20% interest in the equity and a 20% share in any income and loss. Note: Enter debits before credits Transaction General Journal Debit Credit (1) Saved Exercise 12-12 Retirement of partner LO P4 Hunter, Folgers, and Tulip have been partners while sharing net income and loss in a 5.32 ratio (in percents: Hunter, 50%, Folgers, 30%; and Tulip, 20%). On January 31, the date Tulip retires from the partnership, the equities of the partners are Hunter, $310,000, Folgers, $217,000, and Tulip. $155,000 Prepare journal entries to record the retirement of Tulip under independent assumption Assume Tulip is paid $155,000, $175,000, $125.000 for her equity using partnership cash. (Do not round intermediate calculations. Round final answers to the nearest whole dollar.) View transaction list Journal entry worksheet 1 2 3 > Record the retirement of Tulip on the assumption that she is paid for her equity using partnership cash of $155,000. Note: Enter debits before credits Transaction General Journal Debit Credit Required information Use the following information for the Exercises below. [The following information applies to the questions displayed below] Turner, Roth, and Lowe are partners who share income and loss in a 14:5 ratio (in percents: Turner, 10%, Roth, 40%; and Lowe, 50%). The partners decide to liquidate the partnership. Immediately before liquidation, the partnership balance sheet shows total assets, $162,000, total liabilities, $108,000, Turner, Capital $5,500; Roth, Capital $15,500 and Lowe, Capital, $33,000. Cash received from selling the assets was sufficient to repay all but $43,000 to the creditors Exercise 12-13 Liquidation of partnership LO P5 Required: a. Calculate the loss from selling the assets. b. Allocate the loss from part a to the partners. c. Determine how much each partner should contribute to the partnership to cover any remaining capital deficiency Complete this question by entering your answers in the tabs below. Required A Required B Required c Calculate the loss from selling the assets. Liabilities before liquidation Proceeds from sale of assets (paid to creditors) Remaining liabilities Parets from ale nf acente 13 Required information Problem 12-4A Partnership income allocation, statement of partners' equity, and closing entries LO P2 [The following information applies to the questions displayed below) Mo, Lu, and Barb formed the MLB Partnership by making investments of $79,200 $308,000, and $492,800, respectively They predict annual partnership net income of $519,000 and are considering the following alternative plans of sharing income and loss: (a) equally. (b) in the ratio of their initial capital investments; or (asalary allowances of $85,200 to Mo, $63,900 to Lu, and $96,500 to Barb, interest allowances of 10% on their initial capital investments, and the remaining balance shared as follows: 20% to Mo, 40% to Lu, and 40% to Barb . ok Problem 12-4A Part 1 Required: 1. Use the table to show how to distribute net income of $519,000 for the calendar year under each of the alternative plans being considered. (Do not round intermediate calculations.) Income (Loss) Sharing Plan Mo Barb $ Plan (a) Net Income (loss) Balance allocated equally Balance of income (loss) Shares to the partners Plan (b) Net Income (los) Balance allocated in proportion to initial investments Balance of income foss) Mo Lu Barb $ 5 Chen the Required information Problem 12-4A Partnership income allocation, statement of partners' equity, and closing entries LO P2 The following information applies to the questions displayed below) Mo, Lu, and Barb formed the MLB Partnership by making investments of $79,200, $308,000, and $492,800, respectively. They predict annual partnership net income of $519,000 and are considering the following alternative plans of sharing income and loss. (a) equally. (b) in the ratio of their initial capital investments, or ( salary allowances of $85.200 to Mo, $63,900 to Lu, and $96,500 to Barb, interest allowances of 10% on their initial capital investments, and the remaining balance shared as follows: 20% to Mo, 40% to Lu, and 40% to Barb. Problem 12-4A Part 2 2. Prepare a statement of partners' equity showing the allocation of income to the partners assuming they agree to use plan c that income earned is $519,000, and that Mo, Lu, and Barb withdraw $41.700, $55,700, and $71700, respectively, at year-end (Do not round intermediate calculations. Enter all allowances as positive values. Enter losses as negative values.) MLB PARTNERSHIP Statement of Partners' Equity For Year Ended December 31 Mo Lu Barb Total Initial partnership investments Net income Total net income Total 9 8 of 9 !!! O I Required information Problem 12-4A Partnership income allocation, statement of partners' equity, and closing entries LO P2 [The following information applies to the questions displayed below.) Mo, Lu, and Barb formed the MLB Partnership by making investments of $79.200, $308,000, and $492,800, respectively They predict annual partnership net income of $519,000 and are considering the following alternative plans of sharing income and loss: (a) equally. (b) in the ratio of their initial capital investments, or ( salary allowances of $85.200 to Mo, $63,900 to Lu, and $96.500 to Barb: interest allowances of 10% on their initial capital investments, and the remaining balance shared as follows: 20% to Mo, 40% to Lu, and 40% to Barb. Problem 12-4A Part 3 3. Prepare the December 31 journal entry to close Income Summary assuming they agree to use plan cand that net income is $519,000. Mo, Lu, and Barb withdraw $41,700, $55,700, and $71,700, respectively, at year-end Also close the withdrawals accounts. View transaction list Journal entry worksheet >