Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Warrior Accountants is a partnership with three partners. On February 28, 2018, the three partners, K. Durant, S. Curry, and K. Thompson, have capital balances

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Warrior Accountants is a partnership with three partners. On February 28, 2018, the three partners, K. Durant, S. Curry, and K. Thompson, have capital balances of $95,000, $85,000, and $70,000 respectively. The profit and loss ratio is 4:3:1. On July 1st, 2019, Durant withdraws from the partnership and they agree to pay him $100,000 cash from the partnership assets. After Durant leaves, Curry and Thompson agree to a 2:1 profit ratio. During the year ended February 28, 2020, the partnership earns a profit of $24,000. Neither Curry nor Thompson makes any withdrawals because the partnership is short of cash after paying Durant. On March 1, 2020, Curry and Thompson agree to admit J. Cole to the partnership with a 25% interest for $75,000 cash. After Cole is admitted, the new profit ratio will be 4:3:2 for Curry, Thompson, and Cole, respectively. (a) Journalize the withdrawal of Durant from the partnership. [3] (b) What are the balances in Curry's and Thompson's capital accounts after Durant leaves the partnership? [2] (c) Prepare the journal entry to close the income summary account on February 28, 2020. [3 (d) What is the total partnership capital on March 1, 2020, prior to admitting Cole? [2] (e) Prepare the journal entry to record the admission of Cole into the partnership. [3] (1) What is the balance in each of the partners' capital accounts after Cole is admitted to the partnership? (2)

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

Horngrens Accounting The Financial Chapters

Authors: Tracie Miller Nobles, Brenda Mattison

13th Edition

0136162185, 9780136162186

More Books

Students also viewed these Accounting questions

Question

Do you favor a civil service system? Why or why not?

Answered: 1 week ago