Partnership A, B, and C is a law firm. You have been engaged as accountant to prepare financial statements for the year ended December 31, 2019. The partnership's trial balance is shown on the "2019 Tr. Bal." page (see tab below). 'Salary expenses' listed on the trial balance are each partners withdrawals for the year. Partnership profits are allocated based first on salaries, then on interest on opening capital balances, then on a fixed ratio. Salary allocation amounts are: A $100,000 B $100,000 $160,000 Opening capital balances are: $70,000 $60,000 $70,000 5% Interest rate is: The fixed ratio is: A B 2 3 5 Required 1 Prepare year-end adjusting entries. No descriptions are necessary. 2 Allocate partnership profit or loss to each partner. Prepare the necessary adjusting entry. 3 Post the adjusting entries and complete the trial balance. 4 Prepare an income statement and statement of partners' capital for the year ended December 31, 2019 and a balance sheet at December 31. Part B (2020) a. On December 31, 2020 new partner D invests other assets into the partnership for a one- quarter ownership interest. An equal amount of capital is contributed by A, B, and C to make up the difference. At December 31, 2020, the partners' capital balances are as follows: A $200,000 180,000 B 190,000 $570,000 Fair value of other assets from D $50,000 b. Immediately after this, partner C withdraws from the partnership. She is paid in cash the balance in her capital account plus a bonus, contributed equally from the capital balances of A, B, and D. Bonus paid to C $ 18,000 Required 5 Prepare necessary adjusting entries at December 31, 2020 to record the admission of partner D and the withdrawal of partner C. Show all calculations. Part C (2021 and 2022) The trial balance of A, B, and D at December 31, 2021 after all adjustments have been made is as follows: Account Title Cash Other Assets Accounts Payable A, Capital B, Capital C, Capital Adjusted Balances Debit Credit 83,000 80,000 163,000 140,000 7,000 7,000 9,000 163,000 On January 1, 2022 the partnership is liquidated. Other assets are sold for: $144,000 Gains and losses are liquidated in a ratio of: A 3 B 2 D 5 Required 6 Print out the "Part. Liqu." page (see tab below). Complete the schedule. Assume any partner deficiency (debit balance) is repaid with cash by the applicable partner. 7 Prepare the journal entries to record the liquidation. 1 2 3 4 Salaries Account (A) Captial Account (B) Captial Account (C) Captial Account Interest on Op Cap Account (A) Captial Account (B) Captial Account (C) Captial Account (A) Captial Account (B) Captial Account (C) Captial Account Loss of Share (A) Drawings Account (B) Drawings Account (C) Drawings Account Description Salary (A) Salary (B) Salary (C) A, B, and C GENERAL JOURNAL Debit 360,000 10,000 44,000 66,000 110,000 110,000 100,000 160,000 Credit 100,000 100,000 160,000 3,500 3,000 3,500 220,000 110,000 100,000 160,000 Amount of profit Salary allocation Balance Interest allocation: A B C Balance Fixed ratio allocation A B C Balance Allocated to partners Opening cap. Rate 5% 5% 5% 20% 30% 50% A 0 $0 $0 B 0 $0 $0 C input values Hit F9 to update formulas (or set your formulas to automatically update) $0 $0 Total $200,000 0 200,000 200,000 0 $200,000 ***this needs to be $0 Account Title Cash Accounts Receivable Accounts Payable A, Capital A, Withdrawals B, Capital B, Withdrawals C, Capital C, Withdrawals Income Summary Fees Revenue Office Expense Salaries Expense - A Salaries Expense - B Salaries Expense - C Unadjusted Balances Credit Debit 90,000 300,000 300,000 110,000 140,000 150,000 1,090,000 A, B, and C Trial Balance At December 31, 2019 50,000 160,000 180,000 200,000 500,000 1,090,000 # Adjusting Entries Debit 0 Credit # Adjusted Balances Debit 90,000 300,000 0 0 0 300,000 110,000 140,000 150,000 1,090,000 Credit 50,000 160,000 180,000 200,000 0 500,000 1,090,000 input values Hit F9 to update formulas (or set your formulas to automatically update) A, B, and C Income Statement For the Year Ended December 31, 2019 Bal. at Jan 1, 2019 Bal. at Dec. 31, 2019 Assets A, B, and C Statement of Partners' Capital For the Year Ended December 31, 2019 A B A, B, and C Balance Sheet At December 31, 2019 Liabilities Partners' Equity Total Opening balance Allocation of gain (loss) Amount A B D Ratio Cash A, B, and D Statement of Partnership Liquidation For the Day Ending January 1, 2022 Other assets Accounts payable A Partners' capital B D