Lawler and Riello formed a partnership on March 15, 2024. The partners agreed to contribute equal amounts of capital. Lawler contributed her sole proprietorship's assetsand liabilities (credit balances in parentheses) as follows:XData tableLawler's BusinessCurrent MarketValueits. Select the explanation on the last line of the journal entry table.)Accounts Receivable10,600Merchandise Inventory29,000Prepaid Expenses2,800Credit26,000Store Equipment, NetAccounts Payable(25,000)DoneMore infoOn March 15, Riello contributed cash in an amount equal to the current market value ofLawler's partnership capital. The partners decided that Lawler will earn 60% of partnershipprofits because she will manage the business. Riello agreed to accept 40% of the profits.During the period ended December 31, the partnership earned net income of $70,000.Lawler's withdrawals were $36,000, and Riello's withdrawings totaled $26,000.PrintDoneRequirement 1. Journalize the partners' initial contributions. (Record debits first, then, credits. Select the explanation on the last line of the journal entry table.)Begin by journalizing the contribution made by Lawler.DateAccounts and ExplanationDebitCreditMar. 15Now journalize the contribution made by Riello.DateAccounts and ExplanationDebitCreditMar. 15Requirement 2. Prepare the partnership balance sheet immediately after its formation on March 15, 2024. (If a box is not used in the table leave the box empty; do notselect a label or enter a zero.)Lawler and RielloBalance SheetMarch 15, 2024AssetsLiabilitiesPartners' EquityTotal Partners' EquityTotal AssetsTotal Liabilities and Partners' EquityRequirement 3. Journalize the closing of the Income Summary and partner Withdrawal accounts on December 31, 2024. (Prepare compound entries. Record debits first,then, credits. Select the explanation on the last line of the journal entry table.)Begin by closing the Income Summary account on December 31.DateAccounts and ExplanationDebitCreditDec. 31Now journalize the closing of the partner Withdrawal accounts on December 31.DateAccounts and ExplanationDebitCreditDec. 31Print$Book Value12,900 $45,0003,10045,000(25,000)IX

The partnership comes into existence when two or more persons agree to do the business and further…

Lawler and Riello formed a partnership on March 15, 2024. The partners agreed to contribute equal amounts of capital. Lawler contributed her sole proprietorship's assets and liabilities (credit balances in parentheses) as follows: X Data table Lawler's Business its. Select the explanation on the last line of the journal entry table.) Credit Accounts Receivable Merchandise Inventory Prepaid Expenses Store Equipment, Net Accounts Payable $ Book Value Current Market Value 10,600 29,000 2,800 26,000 (25,000) 12,900 $ 45,000 3,100 45,000 (25,000)

Lawler and Riello formed a partnership on March 15, 2024. The partners agreed to contribute equal amounts of capital. Lawler contributed her sole proprietorship's assets and liabilities (credit balances in parentheses) as follows: X Data table Lawler's Business its. Select the explanation on the last line of the journal entry table.) Credit Accounts Receivable Merchandise Inventory Prepaid Expenses Store Equipment, Net Accounts Payable $ Book Value Current Market Value 10,600 29,000 2,800 26,000 (25,000) 12,900 $ 45,000 3,100 45,000 (25,000)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

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

Lawler and Riello formed a partnership on March 15, 2024. The partners agreed to contribute equal amounts of capital. Lawler contributed her sole proprietorship's assets
and liabilities (credit balances in parentheses) as follows:
X
Data table
Lawler's Business
Current Market
Value
its. Select the explanation on the last line of the journal entry table.)
Accounts Receivable
10,600
Merchandise Inventory
29,000
Prepaid Expenses
2,800
Credit
26,000
Store Equipment, Net
Accounts Payable
(25,000)
Done
More info
On March 15, Riello contributed cash in an amount equal to the current market value of
Lawler's partnership capital. The partners decided that Lawler will earn 60% of partnership
profits because she will manage the business. Riello agreed to accept 40% of the profits.
During the period ended December 31, the partnership earned net income of $70,000.
Lawler's withdrawals were $36,000, and Riello's withdrawings totaled $26,000.
Print
Done
Requirement 1. Journalize the partners' initial contributions. (Record debits first, then, credits. Select the explanation on the last line of the journal entry table.)
Begin by journalizing the contribution made by Lawler.
Date
Accounts and Explanation
Debit
Credit
Mar. 15
Now journalize the contribution made by Riello.
Date
Accounts and Explanation
Debit
Credit
Mar. 15
Requirement 2. Prepare the partnership balance sheet immediately after its formation on March 15, 2024. (If a box is not used in the table leave the box empty; do not
select a label or enter a zero.)
Lawler and Riello
Balance Sheet
March 15, 2024
Assets
Liabilities
Partners' Equity
Total Partners' Equity
Total Assets
Total Liabilities and Partners' Equity
Requirement 3. Journalize the closing of the Income Summary and partner Withdrawal accounts on December 31, 2024. (Prepare compound entries. Record debits first,
then, credits. Select the explanation on the last line of the journal entry table.)
Begin by closing the Income Summary account on December 31.
Date
Accounts and Explanation
Debit
Credit
Dec. 31
Now journalize the closing of the partner Withdrawal accounts on December 31.
Date
Accounts and Explanation
Debit
Credit
Dec. 31
Print
$
Book Value
12,900 $
45,000
3,100
45,000
(25,000)
I
X

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