Problem 11-6A Partnership entries, profit allocation, admission of a partner LO2, 3, 4

On June 1, 2020, Jill Bow and Aisha Adams formed a partnership to open a gluten-free commercial bakery, contributing $296,000 cash and $392,000 of equipment, respectively. The partnership also assumed responsibility for a $56,000 note payable associated with the equipment. The partners agreed to share profits as follows: Bow is to receive an annual salary allowance of $166,000, both are to receive an annual interest allowance of 5% of their original capital investments, and any remaining profit or loss is to be shared 40/60 (to Bow and Adams, respectively). On November 20, 2020, Adams withdrew cash of $116,000. At year-end, May 31, 2021, the Income Summary account had a credit balance of $540,000. On June 1, 2021, Peter Williams invested $136,000 and was admitted to the partnership for a 20% interest in equity.

Required:

1.Prepare journal entries for the following dates.

a.June 1, 2020

b.November 20, 2020

c.May 31, 2021

d.June 1, 2021

2.Calculate the balance in each partner's capital account immediately after the June 1, 2021, entry.