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Homework Ch 12 - Partnerships Question 1. Problem 12 HW Score: %0 of 20 points Patar O Points of 10 Save mon Skend Call Woman January 5, 2000 The passaged to invest amounts of capit Spinka invested to proprietors and bitrat Click the icon to view the book and market values of investments Onorary.wiled canina anauntequal to the current market of Sink's partnership. The partie de at sprike wokteam 75 percent of parship protocolse he would rather Wispeed 15 percent of Danga periodendid Dec 312000 the samed 5450.000 Wanawiorals were $145.000, and press with als were $72.000 1. Requirement 1. mare the partners Jual theme made by Anton Si Records for the credits. Explanat required) Journal Entry Accounts Date Debit Cred Required 1 1. Joumare the power 2. Prepare where is so January 2020 1 Computer Copier Doces on December 31, 2000 Print Done Vince Spinks and Corey Williams formed a partnership on January 1, 2020. The partners agreed to invest equal amounts of capital. Spinks invested his proprietorship's assets and liabilities (all accounts have normal balances): (Click the icon to view the book and market values of investments.) bits On January 1, Williams invested cash in an amount equal to the current market value of Spinks's partnership capital. The partners decided that Spinks would earn 75 percent of partnership profits because he would manage the business. Williams agreed to accept 25 percent of profits. During the period ended December 31, 2020, the partnership earned $470,000. Williams's withdrawals were $140,000, and Spinks's withdrawals were $200,000. Required . the assets and assuming the liabilities at their current market value. Requirement 1. Journalize the partners' initial investments, Start by journalizing the investment made by Vince Spinks at the current market value. Remember, all assets and liabilities are recorded according to their normal balances. The Capital account is increased by the current market value of the assets and decreased by the current market value of the liabilities. (Record debits first, then credits. Explanations are not required.) Credit Date Jan Journal Entry Accounts Store Equipment Inventory Accounts Receivable Prepaid Expenses Spinks, Capital Accounts Payable Debit 60,000 71,000 29,000 13,000 125,000 48,000 Vince Spinks and Corey Williams formed a partnership on January 1, 2020. The partners agreed to invest equal amounts of capital. Spinks invested his proprietorship's assets and liabilities (all accounts have normal balances): (Click the icon to view the book and market values of investments.) debits On January 1, Williams invested cash in an amount equal to the current market value of Spinks's partnership capital . The partners decided that Spinks would eam 75 percent of partnership profits because he would manage the business. Williams agreed to accept 25 percent of profits. During the period ended December 31, 2020, the partnership earned $470,000. Williams's withdrawals were $140,000, and Spinks's withdrawals were $200,000. Required Now journalize the investment made by Corey Williams. Recall that Williams is investing cash that is equal to the current market value of Spinks's capital. Journal Entry Accounts Date Debit Credit Jan 1 Cash 125,000 Williams, Capital 125,000 ts Vince Spinks and Corey Williams formed a partnership on January 1, 2020. The partners agreed to invest equal amounts of capital. Spinks invested his proprietorship's assets and liabilities (all accounts have normal balances): (Click the icon to view the book and market values of investments.) On January 1, Williams invested cash in an amount equal to the current market value of Spinks's partnership capital. The partners decided that Spinks would earn 75 percent of partnership profits because he would manage the business. Williams agreed to accept 25 percent of profits. During the period ended December 31, 2020, the partnership earned $470,000. Williams's withdrawals were $140,000, and Spinks's withdrawals were $200,000. Required Requirement 2. Prepare the partnership balance sheet immediately after its formation on January 1, 2020. We will start with preparing the asset portion of the balance sheet for the partnership. The assets and liabilities on a proprietorship balance sheet are the same for a partnership balance sheet. Spinks and Williams Balance Sheet December 31, 2020 Assets Liabilities Cash Accounts receivable Inventory Prepaid expenses Store equipment $ 125,000 29,000 71,000 13,000 60,000 Capital $ 298,000 Total assets Now complete the balance sheet by entering in the liabilities and capital. Recall that Assets = Liabilities + Capital Spinks and Williams Balance Sheet December 31, 2020 Assets $ 48.000 Cash Accounts receivable Inventory Prepaid Expenses Store Equipment Liabilities $ 125,000 Accounts payable 29,000 71,000 Capital 13,000 Spinks, capital 60,000 Williams, capital $ 298,000 Total liabilities and capital 125,000 125,000 $ 298,000 Total assets Requirement 3. Calculate the partners' Capital balances at December 31, 2020. Recall that when a partnership divides profits or losses, they do so by the profit-and-loss ratio agreed upon during the establishment of the partnership. In this problem, the partners have agreed to share all profits and losses based on 25 percent to Williams and 75 percent to Spinks. Using the formula below, calculate the allocation of net income between the partners. (Round final answers to the nearest whole number.) Partner Net income X Allocation ratio Total net income allocated Spinks $ 470,000 352,500 Williams $ 470,000 $ 117,500 = S 75 % 25 % X Vince Spinks and Corey Williams formed a partnership on January 1, 2020. The partners agreed to invest equal amounts of capital. Spinks invested his proprietorship's assets and liabilities (all accounts have normal balances): (Click the icon to view the book and market values of investments.) bits On January 1, Williams invested cash in an amount equal to the current market value of Spinks's partnership capital. The partners decided that Spinks would earn 75 percent of partnership profits because he would manage the business. Williams agreed to accept 25 percent of profits. During the period ended December 31, 2020, the partnership earned $470,000. Williams's withdrawals were $140,000, and Spinks's withdrawals were $200,000. Required Using the calculations above, complete the table below to determine the ending capital balances for each of the partners. Refer to the information given to determine the beginning balances and the withdrawals. Be sure to total the ending capital. (Round final answers to the nearest whole number.) Spinks and Williams Partnership Balances December 31, 2020 Spinks Williams Total Beginning Balance 125,000 $ 125,000 $ 250,000 Allocation of Net Income to Partners: Spinks 352,500 Williams 117,500 470,000 Withdrawals (200,000) (140,000) (340,000) Ending Capital Balance 277,500 $ 102,500 $ 380,000