OBJ. 2 "s original investment Catrina Santana contributed a patent, accounts receivable, and $23,000 cash to a partnership. The patent had a book value of $8,000. However, the technology covered by the patent ap peared to have significant market potential. Thus, the patent was appraised at $85,000. The accounts receivable control account was $38.000, with an allowance for doubtful accounts of $2,000. The partnership also assumed a $10,000 account payable owed to a Santana supplier. Provide the journal entry for Santana's contribution to the partnership.
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.
![allowance of $6,000 per month to partner C.
The articles of partnership provide for a salary
If C withdrew only $4,000 per month, would
a partner's cash withdrawal in lieu of
edited to
interest from another Dartner and (b) by contribu-
tion of assets to the partnership.
accoi
what
9. Why is it important to state all partnership assets in
terms of current prices at the time of the admission
of a new partner?
10. Why might a partnership pay a bonus to a newly
admitted partner?
pactice Exercises
PE 12-1A Journalizing partner's original investment
Catrina Santana contributed a patent, accounts receivable, and $23,000 cash to a parthersinpa
The patent had a book value of $8,000. However, the technology covered by the patent ap
peared to have significant market potential. Thus, the patent was appraised at $85,000. The
accounts receivable control account was $38.000, with an allowance for doubtful accounts of
$2,000. The partnership also assumed a $10,000 account payable owed to a Santana suplier.
Provide the journal entry for Santana's contribution to the partnership.
EE 12-1 p. 55s
OBJ. 2
HOW
PE 12-1B Journalizing partner's original investment
Austin Fisher contributed land, inventory, and $36,000 cash to a partnership. The land
had a book value of $120,000 and a market value of $175,000. The inventory had a book
value of $50,000 and a market value of $42,000. The partnership also assumed a $35,000
note payable owed by Fisher that was used originally to purchase the land.
Provide the journal entry for Fisher's contribution to the partnership.
EE 12-1 p 555
OBJ. 2
PE 12-2A Dividing partnership net incomesbiup
Han Lee and Monica Andrews formed a partnership, dividing income as follows:
1. Annual salary allowance to Lee of $32,000.
EE 12-2 p. 558
OBJ. 2
1,000,021 bas
2. Interest of 4% on each partner's capital balance on January 1.
S000
WOH2
WOH M
3. Any remaining net income divided to Lee and Andrews, 2:1.
Lee and Andrews had $80,000 and $150,000, respectively, in their January 1 capital bal-
ances. Net income for the year was $64,000.
How much net income should be distributed to Lee and Andrews?
pnlisblupii
gnitsbiupil oTO
PE 12-2B Dividing partnership net income
John Prado and Ayana Nicks formed a partnership, dividing income as follows:
EE 12-2 p. 558
OBJ. 2
1. Annual salary allowance to Prado, $10,000 and Nicks, $28,000.
WOH
2. Interest of 5% on each partner's capital balance on January 1.
3. Any remaining net income divided equally.
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