The partnership of Jordan and O'Neal began business on January 1, 20X7. Each partner contributed the following assets (the noncash assets are stated at their fair values on January 1, 20X7): O'Neal Jordan 50,800 60,900 81,200 Cash Inventories -0- Land 131,500 -0- 101,200 Equipment -0- The land was subject to a $51,700 mortgage, which the partnership assumed on January 1, 20X7. The equipment was subject to an installment note payable that had an unpaid principal amount of $21,900 on January 1, 20X7. The partnership also assumed this note payable. Jordan and O'Neal agreed to share partnership income and losses in the following manner: O'Neal Jordan Interest on beginning capital balances Salaries 38 38 $13,000 $13,000 40 Remainder 608 During 20X7, the following events occurred: 1. Inventory was acquired at a cost of $30,400. At December 31, 20X7, the partnership owed $6,200 to its suppliers. 2. Principal of $5,600 was paid on the mortgage. Interest expense incurred on the mortgage was $2,200, all of which was paid by December 31, 20X7 3. Principal of $3,400 was paid on the installment note. Interest expense incurred on the installment note was $2,100, all of which was paid by December 31, 20X7. 4. Sales on account amounted to $163,500. At December 31, 20X7, customers owed the partnership $22,300. 5. Selling and general expenses, excluding depreciation, amounted to $34,100. At December 31, 20x7, the partnership owed $7,200 of accrued expenses. Depreciation expense was $6,100. 6. Each partner withdrew $220 each week in anticipation of partnership profits. 7. The partnership's inventory at December 31, 20X7, was $21,300. 8. The partners allocated the net income for 20X7 and closed the accounts. Additional Information On January 1, 20X8, the partnership decided to admit Hill to the partnership. On that date, Hill invested $95,180 of cash into the partnership for a 20 percent capital interest. Total partnership capital after Hill was admitted totaled $453,000. b. Prepare the income statement for the Jordan-O'Neal Partnership for the year ended December 31, 20X7 JORDAN O'NEAL PARTNERSHIP Income Statement For the Year Ended December 31, 20X7 Less: Cost of Goods Sold: Goods Available for Sale 10 Gross Profit $ 0 0 $ 0 Net Income Balance Sheet At December 31, 20X7 Assets O Total Assets Liabilities and Capital Liabilities: Total liabilities $ 0 Capital: Total capital Total Liabilities and Capital 0 d. Prepare the journal entry for the admission of Hill on January 1, 20X8. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet A Record the entry for the admission of Hill on January 1, 20x8 Note: Enter debits before credits. Credit General Journal Debit Event 1
