C4.5 Take me to the textOn January 1, 2020, Amy, Bob, and Mike form a limited liability partnership tostart a small public accounting firm. Amy, Bob, and Mike have invested$78,000, $72,000 and $46,000 respectively. Mike has also invested a pieceof equipment that is worth $4,000. During the first year of operations in2020, the firm earned a net income of $256,000. All earnings are to bedivided according to the initial capital contribution of each partner. Inaddition, Amy and Bob withdrew $7,500 and $8,100 cash from the business.On January 1, 2021, a new partner (Helen) was added to the firm. Helenpurchased 80% of Amy's investment and 13% of Mike's investment (equity)in the business.a) Assume year-end is on December 31, prepare the journal entries to set upthe partnership, record the withdrawals, and distribute the income for 2020.Also, prepare any additional closing or adjusting entries.Do not enter dollar signs or commas in the input boxes.Round all answers to the nearest whole dollar.For transactions with more than one debit or credit, enter the accounts inalphabetical order.DateAccount Title and ExplanationDebitCreditJan 1To record set up of partnershipDec 31To record owner drawingaccounts during the yearDec 31To close income summaryaccountDec 31To close withdrawals accounts b) Prepare the journal entry to record the admission of Helen.DateAccount Title and ExplanationDebitCreditJan 1To record admission of newpartnerc) Calculate the ending capital balance of each partner after the addition ofHelen on January 1, 2021.Use the negative sign for capital transfers that are subtracted.AmyBobMikeHelenBeginningCapitalBalanceAdd: Shareof netincomeSubtotalLess:WithdrawalsCapitaltransferEndingCapitalBalanceContact us

W.N. - 1 : Capital Contributions by Mike : (a) in the form of Cash = $ 46,000 (b) in the form of…

On January 1, 2020, Amy, Bob, and Mike form a limited liability partnership to start a small public accounting firm. Amy, Bob, and Mike have invested $78,000, $72,000 and $46,000 respectively. Mike has also invested a piece of equipment that is worth $4,000. During the first year of operations in 2020, the firm earned a net income of $256,000. All earnings are to be divided according to the initial capital contribution of each partner. In addition, Amy and Bob withdrew $7,500 and $8,100 cash from the business. On January 1, 2021, a new partner (Helen) was added to the firm. Helen purchased 80% of Amy's investment and 13% of Mike's investment (equity) in the business.

On January 1, 2020, Amy, Bob, and Mike form a limited liability partnership to start a small public accounting firm. Amy, Bob, and Mike have invested $78,000, $72,000 and $46,000 respectively. Mike has also invested a piece of equipment that is worth $4,000. During the first year of operations in 2020, the firm earned a net income of $256,000. All earnings are to be divided according to the initial capital contribution of each partner. In addition, Amy and Bob withdrew $7,500 and $8,100 cash from the business. On January 1, 2021, a new partner (Helen) was added to the firm. Helen purchased 80% of Amy's investment and 13% of Mike's investment (equity) in the business.

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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