Gorman and Morton form a partnership on May 1, 2019. Gorman contributes cash of $65,000; Morton conveys title to the following properties to the partnership: Book Value Fair Value Equipment $ 22,500 $ 43,000 Licensing agreements 42,500 51,000 The partners agree to start their partnership with equal capital balances. No goodwill is to be recognized. According to the articles of partnership written by the partners, profits and losses are allocated based on the following formula: Gorman receives a compensation allowance of $1,500 per month. All remaining profits and losses are split 30:70 between Gorman and Morton, respectively. Each partner can make annual cash drawings of $4,000 beginning in 2020. Net income of $18,500 is earned by the business during 2019. Steele is invited to join the partnership on January 1, 2020. Because of her business reputation and financial expertise, she is given a 40 percent interest for $69,000 cash. The bonus approach is used to record this investment, made directly to the business. The articles of partnership are amended to give Steele a $3,000

compensation allowance per month and an annual cash drawing of $8,000. Remaining profits are now allocated: Gorman 8 % Morton 52 Steele 40 All drawings are taken by the partners

during 2020. At year-end, the partnership reports net income of $114,000. On January 1, 2021, Frank (previously a partnership employee) is admitted into the partnership. Each partner transfers 10 percent to Frank, who makes the following payments directly to the partners: Gorman $ 10,337 Morton 9,053 Steele 15,060 Once again, the articles of partnership must be amended to allow for the entrance of the new partner. This change entitles Frank to a compensation allowance of $1,300 per month and an annual drawing of $3,000. Profits and losses are now assigned as follows: Gorman 14.0 % Morton 42.0 Steele 34.0 Frank 10.0 For the year of 2021, the partnership earned a profit of $61,000, and each partner withdrew the allowed amount of cash. Prepare schedules that determine the capital balances for the individual partners as of the end of each year 2019 through 2021.

Gorman and Morton form a partnership on May 1, 2019. Gorman contributes cash of $65,000; Morton conveys title to the following properties to the partnership:

	Book Value		Fair Value
Equipment	$	22,500	$	43,000
Licensing agreements		42,500		51,000

The partners agree to start their partnership with equal capital balances. No goodwill is to be recognized.

According to the articles of partnership written by the partners, profits and losses are allocated based on the following formula:

• Gorman receives a compensation allowance of $1,500 per month.
• All remaining profits and losses are split 30:70 between Gorman and Morton, respectively.
• Each partner can make annual cash drawings of $4,000 beginning in 2020.

Net income of $18,500 is earned by the business during 2019.

Steele is invited to join the partnership on January 1, 2020. Because of her business reputation and financial expertise, she is given a 40 percent interest for $69,000 cash. The bonus approach is used to record this investment, made directly to the business. The articles of partnership are amended to give Steele a $3,000 compensation allowance per month and an annual cash drawing of $8,000. Remaining profits are now allocated:

Gorman	8	%
Morton	52
Steele	40

All drawings are taken by the partners during 2020. At year-end, the partnership reports net income of $114,000.

On January 1, 2021, Frank (previously a partnership employee) is admitted into the partnership. Each partner transfers 10 percent to Frank, who makes the following payments directly to the partners:

Gorman	$	10,337
Morton		9,053
Steele		15,060

Once again, the articles of partnership must be amended to allow for the entrance of the new partner. This change entitles Frank to a compensation allowance of $1,300 per month and an annual drawing of $3,000. Profits and losses are now assigned as follows:

Gorman	14.0	%
Morton	42.0
Steele	34.0
Frank	10.0

For the year of 2021, the partnership earned a profit of $61,000, and each partner withdrew the allowed amount of cash.

Prepare schedules that determine the capital balances for the individual partners as of the end of each year 2019 through 2021.

Prepare a schedule that determines the ending capital balance for each partner as of the end of 2019.

GORMAN and MORTON
Statement of Partners' Capital
For the Year Ending December 31, 2019
	Gorman	Morton	Total
Beginning balances	$13,950	$4,550	$18,500
Net income allocation	1,950	4,550	6,500
Drawings	93,450	84,050	177,500
Ending balances	$109,350	$93,150	$202,500

Prepare a schedule that determines the ending capital balance for each partner as of the end of 2020. (Amounts to be deducted should be indicated with minus sign.)

GORMAN, MORTON and STEELE
Statement of Partners' Capital
For the Year Ending December 31, 2020
	Gorman	Morton	Steele	Total
Beginning balances				$0
Steele's contribution				0
Income allocation				0
Drawings				0
Ending balances	$0	$0	$0	$0

Prepare a schedule that determines the ending capital balance for each partner as of the end of 2021. (Amounts to be deducted should be indicated with minus sign.)

GORMAN, MORTON, STEELE and FRANK
Statement of Partners' Capital
For the Year Ending December 31, 2021
	Gorman	Morton	Steele	Frank	Total
Beginning balances					$0
Admission of Frank					0
Allocation of net income					0
Drawings					0
Ending balances	$0	$0	$0	$0	$0