(SEE ATTACHED SPREADSHEET TO RECORD ANSWERS)

2014

February 1- Brady and Manning decide to start up a partnership. Brady brings in $10 000 cash and equipment costing $60 000, with $17 000 in the accumulated depreciation account. The fair market value of the equipment is $37 000. Manning brings $54 000 in cash. They agree to an income ratio of 5:4.

December 31- The business records a net income of $24 000, and Brady has a debit balance of

$16 000 in his drawings account.

a) Record the journal entry to establish the partnership.

b) Record the entry to allocate the net income to the partners' capital accounts.

c) Prepare a Statement of Partners' Equity for 2014.

2015

January 1- McNabb joins the partnership by contributing $46 000 in cash. A new partnership agreement is drawn up. Brady, Manning and McNabb agree to salaries of $5 000 for each partner and a 5:4:3 income ratio.

December 31- The business recorded a net income of $30 000. Brady had drawings of $20 000 and Manning had drawings of $4 000.

a) Record the entry to admit the new partner into the business.

b) Record the entry to allocate the net income to the partners' capital accounts.

c) Prepare a Statement of Partners' Equity for 2015.

2016

January 1- Manning decides to leave the partnership. McNabb agrees to pay Manning $73 000 in a private transaction for his entire share in the business. The result is that all of Manning's equity will be transferred to McNabb. The income or loss will now be divided equally (50-50) between Brady and McNabb. There will be no salary.

December 31- The business recorded a net loss of $46 000. There were no drawings. Show the entry to allocate the net income to the partners' capital accounts. Prepare a Statement of Partners' Equity for 2016.

a) Prepare the entry to record the departure of Manning.

b) Record the entry to allocate the net income to the partners' capital accounts.

c) Prepare a Statement of Partners' Equity for 2016.

2017

January 1 The partners decide to liquidate the partnership. They have the following balances:

Cash$29,917

Accounts Receivable $4 500

Equipment $ 110 000

Accumulated Depreciation $ 25 000

Accounts Payable $ 4 417

The partners were able to collect $3 500 of the accounts receivable and sell the equipment for $72 000.

a) Record all journal entries to dissolve the partnership.

When completing this liquidation, if your balance sheet does not balance because your capital balances are different, then adjust the cash figure to an amount that would allow the balance sheet to balance before you start the liquidation process.

General Journal Date 2014 Jan Dec. Particulars 1 31 2015 Jan 1 Dec 31 Debit Page ___ Credit 2016 Jan 1 Dec. 31 2017 Jan 1 1 1 1 SUPPORTING CALCULATIONS 2015 Brady Manning Income Ratio 5:4:3 Net Income Income Distribution Salary Net Income allocated PRIOR to ratio application Net Income to be allocated based on income ratio Share of income based on income ratio Total allocation of net income McNabb Total 2017 Balance Sheet Before Liq After Liq Assets Cash Equipment A/R 0 0 Liabilities & Equity Accounts Payable Brady, Capital NcNabb, Capital 0 0 Brady, Manning and McNabb Statement of Partners' Equity For the years ending December 31, 2014-2016 2014 Balance, Jan. 1 Add: Investments Net Income Subtotal Less: Drawings Balance, Dec. 31 2015 Balance, Jan. 1 Add: Investments Net Income Subtotal Less: Drawings Balance, Dec. 31 Brady Manning McNabb Total 2016 Balance, Jan. 1 Add: Buyout Net Loss Balance, Dec. 31