Activity 4: On January 2, 2020, Jenny and Kenny formed a partnership. The following assets were contributed by each of the partners: LOU UN Jenny 40,000 Cash Inventory Equipment Kenny P 60,000 10,000 180,000 60,000 The equipment of Kenny is subject to a mortgage of P50,000 which the partnership has assumed. The partnership agreement specifies that each partner receives 10% interest on her beginning capital balance. Jenny receives. an annual salary of P15,000; Kenny receives an annual salary of P20,000. The remaining profit or loss is divided using 2:3 ratio with 2 parts assigned to Jenny and 3 parts assigned to Kenny. During 2020, the partnership had an income of P185,000. Assume there were no drawings during 2020. On January 2, 2021, Jenny and Kenny decide to admit a new partner, Lenny, for a 1/6 interest in the firm for P175,000. The bonus method is used to record the admission of the new partner. After admitting the new partner the partnership agreement is amended as follows: Each partner receives 10% interest on her beginning capital balance. Each partner receives an annual salary of P20,000. The residual profit or loss is divided in a ratio of 30% to Jenny, 50% to Kenny and 20% to Lenny. On December 31, 2022, the partnership is dissolved. On this date, after closing the books, the following information is available: EBIFI 1911 P 160,000 Loan to Kenny O CI50,000 700,000 110,000 200,000 400,000 200,000 Cash Other Assets Liabilities Jenny, Capital Kenny, Capital Lenny, Capital During the month of January 2023, assets with a book value of P180,000 were sold for P210,000. Required: (Show your solution in good accounting form) 1. Prepare the journal entry to record the contribution of the partners of January 2, 202 2. Prepare the journal entry to record the admission of Lenny to the partnership 3. Prepare a schedule of safe payments as of January 31, 2023
Activity 4: On January 2, 2020, Jenny and Kenny formed a partnership. The following assets were contributed by each of the partners: LOU UN Jenny 40,000 Cash Inventory Equipment Kenny P 60,000 10,000 180,000 60,000 The equipment of Kenny is subject to a mortgage of P50,000 which the partnership has assumed. The partnership agreement specifies that each partner receives 10% interest on her beginning capital balance. Jenny receives. an annual salary of P15,000; Kenny receives an annual salary of P20,000. The remaining profit or loss is divided using 2:3 ratio with 2 parts assigned to Jenny and 3 parts assigned to Kenny. During 2020, the partnership had an income of P185,000. Assume there were no drawings during 2020. On January 2, 2021, Jenny and Kenny decide to admit a new partner, Lenny, for a 1/6 interest in the firm for P175,000. The bonus method is used to record the admission of the new partner. After admitting the new partner the partnership agreement is amended as follows: Each partner receives 10% interest on her beginning capital balance. Each partner receives an annual salary of P20,000. The residual profit or loss is divided in a ratio of 30% to Jenny, 50% to Kenny and 20% to Lenny. On December 31, 2022, the partnership is dissolved. On this date, after closing the books, the following information is available: EBIFI 1911 P 160,000 Loan to Kenny O CI50,000 700,000 110,000 200,000 400,000 200,000 Cash Other Assets Liabilities Jenny, Capital Kenny, Capital Lenny, Capital During the month of January 2023, assets with a book value of P180,000 were sold for P210,000. Required: (Show your solution in good accounting form) 1. Prepare the journal entry to record the contribution of the partners of January 2, 202 2. Prepare the journal entry to record the admission of Lenny to the partnership 3. Prepare a schedule of safe payments as of January 31, 2023
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
Question
Transcribed Image Text:Activity 4: On January 2, 2020, Jenny and Kenny formed a partnership. The following assets
were contributed by each of the partners:
LOUKS
UN
Kenny
P 60,000
10,000
180,000
Jenny
40.000
Cash
Inventory
Equipment
60,000
The equipment of Kenny is subject to a mortgage of P50,000 which the partnership has
assumed. The partnership agreement specifies that each partner receives 10% interest on
her beginning capital balance. Jenny receives an annual salary of P15,000; Kenny receives
an annual salary of P20,000. The remaining profit or loss is divided using 2:3 ratio with 2 parts
assigned to Jenny and 3 parts assigned to Kenny.
During 2020, the partnership had an income of P185,000. Assume there were no drawings
during 2020.
On January 2, 2021, Jenny and Kenny decide to admit a new partner, Lenny, for a 1/6
interest in the firm for P175,000. The bonus method is used to record the admission of the new
partner. After admitting the new partner the partnership agreement is amended as follows:
Each partner receives 10% interest on her beginning capital balance. Each partner receives
an annual salary of P20,000. The residual profit or loss is divided in a ratio of 30% to Jenny, 50%
to Kenny and 20% to Lenny.
On December 31, 2022, the partnership is dissolved. On this date, after closing the books, the
following information is available:
1911
P 160,000
Loan to Kenny TOCI 50,000
Cash
700,000
110,000
200,000
400,000
200,000
Other Assets
Liabilities
Jenny, Capital
Kenny, Capital
Lenny, Capital
During the month of January 2023, assets with a book value of P180,000 were sold for
P210,000.
Required: (Show your solution in good accounting form)
1. Prepare the journal entry to record the contribution of the partners of January 2, 2020.
2. Prepare the journal entry to record the admission of Lenny to the partnership
3. Prepare a schedule of safe payments as of January 31, 2023
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