Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On March 1, Eckert and Kelley formed a partnership. Eckert contributed $80,000 cash, and Kelley contributed land valued at $64,000 and a building valued at

On March 1, Eckert and Kelley formed a partnership. Eckert contributed $80,000 cash, and Kelley contributed land valued at $64,000 and a building valued at $94,000. The partnership also took Kelleys $70,000 long-term note payable associated with the land and building. The partners agreed to share income as follows: Eckert gets an annual salary allowance of $28,000, both get an annual interest allowance of 10% of their initial capital investment, and any remaining income or loss is shared equally. On October 20, Eckert withdrew $30,000 cash and Kelley withdrew $23,000 cash. First year income was $95,000.

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' withdrawals accounts.

2. Determine the balances of the partners capital accounts as of December 31.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing a risk based approach to conducting a quality audit

Authors: Karla Johnstone, Audrey Gramling, Larry Rittenberg

9th edition

9781133939160, 1133939155, 1133939163, 978-1133939153

More Books

Students also viewed these Accounting questions

Question

Describe how to distinguish needs from wants.

Answered: 1 week ago