Keith Williams and Brian Adams were students when they formed a partnership several years ago for a part-time business called Music Works. Adjusted trial balance information for the year ended December 31, 2020, appears below. Account Balance* Account Balance* Accounts payable $ 9,800 Keith Williams, capital** $ 31,300 Accumulated depreciation 78,000 Keith Williams, withdrawals 53,000 Brian Adams, capital** 25,000 Note payable, due May 2022*** 126,000 Brian Adams, withdrawals 63,000 Office supplies 19,000 Cash 211,600 Revenues 486,000 Equipment 306,000 Utilities payable 1,500 Expenses 105,000 *Assume all account balances are normal. **The partners made no investments during the year. ***$43,000 of the note payable is due in May 2021. Required: 1. Prepare calculations that show how the profit should be allocated to the partners assuming the partnership agreement states that profit/(losses) are to be shared by allowing a $93,000 per year salary allowance to Williams, a $153,000 per year salary allowance to Adams, and the remainder on a 3:2 ratio. (Leave no cell blank. Enter "0" when the answer is zero.)
Keith Williams and Brian Adams were students when they formed a partnership several years ago for a part-time business called Music Works. Adjusted trial balance information for the year ended December 31, 2020, appears below. Account Balance* Account Balance* Accounts payable $ 9,800 Keith Williams, capital** $ 31,300 Accumulated depreciation 78,000 Keith Williams, withdrawals 53,000 Brian Adams, capital** 25,000 Note payable, due May 2022*** 126,000 Brian Adams, withdrawals 63,000 Office supplies 19,000 Cash 211,600 Revenues 486,000 Equipment 306,000 Utilities payable 1,500 Expenses 105,000 *Assume all account balances are normal. **The partners made no investments during the year. ***$43,000 of the note payable is due in May 2021. Required: 1. Prepare calculations that show how the profit should be allocated to the partners assuming the partnership agreement states that profit/(losses) are to be shared by allowing a $93,000 per year salary allowance to Williams, a $153,000 per year salary allowance to Adams, and the remainder on a 3:2 ratio. (Leave no cell blank. Enter "0" when the answer is zero.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Keith Williams and Brian Adams were students when they formed a
| Account | Balance* | Account | Balance* | ||||
| Accounts payable | $ | 9,800 | Keith Williams, capital** | $ | 31,300 | ||
| 78,000 | Keith Williams, withdrawals | 53,000 | |||||
| Brian Adams, capital** | 25,000 | Note payable, due May 2022*** | 126,000 | ||||
| Brian Adams, withdrawals | 63,000 | Office supplies | 19,000 | ||||
| Cash | 211,600 | Revenues | 486,000 | ||||
| Equipment | 306,000 | Utilities payable | 1,500 | ||||
| Expenses | 105,000 | ||||||
*Assume all account balances are normal.
**The partners made no investments during the year.
***$43,000 of the note payable is due in May 2021.
Required:
1. Prepare calculations that show how the profit should be allocated to the partners assuming the partnership agreement states that
Transcribed Image Text:Williams
Adams
Total
Profit
Salary allowance
Balance of profit to be allocated
Balance allocated on a 3:2 ratio
Balance of profit
Shares of the partners
2. Prepare the journal entry to close the Income Summary account to the partners' capital accounts.
View transaction list
Journal entry worksheet
1
>
Record the closing of profit to capital.
Transcribed Image Text:3. Prepare a statement of changes in equity and a classified balance sheet.
MUSIC WORKS
Statement of Changes in Equity
For Year Ended December 31, 2020
Williams
Adams
Total
Total
MUSIC WORKS
Balance Sheet
December 31, 2020
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