Groucho, Harpo, and Chico form a partnership on January 1, 2021. Groucho contributes $90,000, Harpo $70,000, and Chico $40,000 to a business called Marx Brothers' Partnership. On a monthly basis, each partner is allocated income and is allowed to receive cash from the business in proportion to the capital they provided. Assume that Groucho receives $3,600 cash per month. Required: a. Prepare the journal entry for the following transactions: (i) The initial investment. (ii) The monthly distribution amounts for each of the three partners. (iii) The allocation of an annual net income of $84,000. For purposes of this journal entry, assume Sales Revenue totaled $126,000 and that all expenses, totaling $42,000, were recorded in a single account called Operating Expenses. (iv) The closing of the drawings accounts at the end of the year. b. Prepare a Statement of Partners' Equity (assume no additional investments made). Complete this question by entering your answers in the table below. Req a Req b Prepare a Statement of Partners' Equity (assume no additional investments made). MARX BROTHERS' PARTNERSHIP Statement of Partners' Equity For the Year Ending December 31, 2021 Investments, January 1, 2021 Add: Net Income Totals Less: Drawings Partners' Equity, December 31, 2021 Groucho Harpo Chico 0 0 0 < Req a Reg b>
Groucho, Harpo, and Chico form a partnership on January 1, 2021. Groucho contributes $90,000, Harpo $70,000, and Chico $40,000 to a business called Marx Brothers' Partnership. On a monthly basis, each partner is allocated income and is allowed to receive cash from the business in proportion to the capital they provided. Assume that Groucho receives $3,600 cash per month. Required: a. Prepare the journal entry for the following transactions: (i) The initial investment. (ii) The monthly distribution amounts for each of the three partners. (iii) The allocation of an annual net income of $84,000. For purposes of this journal entry, assume Sales Revenue totaled $126,000 and that all expenses, totaling $42,000, were recorded in a single account called Operating Expenses. (iv) The closing of the drawings accounts at the end of the year. b. Prepare a Statement of Partners' Equity (assume no additional investments made). Complete this question by entering your answers in the table below. Req a Req b Prepare a Statement of Partners' Equity (assume no additional investments made). MARX BROTHERS' PARTNERSHIP Statement of Partners' Equity For the Year Ending December 31, 2021 Investments, January 1, 2021 Add: Net Income Totals Less: Drawings Partners' Equity, December 31, 2021 Groucho Harpo Chico 0 0 0 < Req a Reg b>
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Groucho, Harpo, and Chico form a partnership on January 1, 2021. Groucho contributes $90,000, Harpo $70,000, and Chico $40,000
to a business called Marx Brothers' Partnership. On a monthly basis, each partner is allocated income and is allowed to receive cash
from the business in proportion to the capital they provided. Assume that Groucho receives $3,600 cash per month.
Required:
a. Prepare the journal entry for the following transactions:
(i) The initial investment.
(ii) The monthly distribution amounts for each of the three partners.
(iii) The allocation of an annual net income of $84,000. For purposes of this journal entry, assume Sales Revenue totaled $126,000
and that all expenses, totaling $42,000, were recorded in a single account called Operating Expenses.
(iv) The closing of the drawings accounts at the end of the year.
b. Prepare a Statement of Partners' Equity (assume no additional investments made).
Complete this question by entering your answers in the table below.
Req a
Req b
Prepare a Statement of Partners' Equity (assume no additional investments made).
MARX BROTHERS' PARTNERSHIP
Statement of Partners' Equity
For the Year Ending December 31, 2021
Investments, January 1, 2021
Add: Net Income
Totals
Less: Drawings
Partners' Equity, December 31, 2021
Groucho
Harpo
Chico
0
0
0
< Req a
Reg b>
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education