On March 1, Eckert and Kelley formed a partnership. Eckert contributed $100,000 cash, and Kelley contributed land valued at $80,000 and a building valued at $110,000. The partnership also took Kelley's $90,000 long-term note payable associated with the land and building. The partners agreed to share income as follows: Eckert gets an annual salary allowance of $29,500, both get an annual. interest allowance of 12% of their initial capital investment, and any remaining income or loss is shared equally. On October 20, Eckert withdrew $32,000 cash and Kelley withdrew $25,000 cash. First year income was $82,000. Required: 1a. & 1b. Prepare journal entries to record the partners' initial capital investments and their subsequent cash withdrawals. 1c. Determine the partners' shares of income, and then prepare journal entries to close Income Summary and the partners' withdrawals accounts. ? Determine the balances of the partners' capital accounts as of December 31.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Net Income
Salary allowances
Balance of income
Interest allowances
Balance of income
Balance allocated equally
Balance of income
Shares of the partners
Date
General Journal
Record the entry to close the partners withdrawals accounts.
Dec 31
Eckert, Capital
Kelley, Capital
Eckert, Withdrawals
Kelley, Withdrawals
Allocation of Partnership Income
Record the entry to close the income summary account.
Dec 31
Income summary
Eckert, Capital
Kelley, Capital
Eckert
$ 29,500 $ 25,000
12,000
Debit
Kelley
$ 41,500 $ 92,150
32,000
25,000
82,000
67,150
Credit
32,000
25,000
Total
$ 82,000
54,500
52,500
79,150
$
0
0
Transcribed Image Text:Net Income Salary allowances Balance of income Interest allowances Balance of income Balance allocated equally Balance of income Shares of the partners Date General Journal Record the entry to close the partners withdrawals accounts. Dec 31 Eckert, Capital Kelley, Capital Eckert, Withdrawals Kelley, Withdrawals Allocation of Partnership Income Record the entry to close the income summary account. Dec 31 Income summary Eckert, Capital Kelley, Capital Eckert $ 29,500 $ 25,000 12,000 Debit Kelley $ 41,500 $ 92,150 32,000 25,000 82,000 67,150 Credit 32,000 25,000 Total $ 82,000 54,500 52,500 79,150 $ 0 0
Exercise 12-7 (Algo) Journalizing partnership transactions LO P2
On March 1, Eckert and Kelley formed a partnership. Eckert contributed $100,000 cash, and Kelley contributed land valued at $80,000
and a building valued at $110,000. The partnership also took Kelley's $90,000 long-term note payable associated with the land and
building. The partners agreed to share income as follows: Eckert gets an annual salary allowance of $29,500, both get an annual
interest allowance of 12% of their initial capital investment, and any remaining income or loss is shared equally. On October 20, Eckert
withdrew $32,000 cash and Kelley withdrew $25,000 cash. First year income was $82,000.
Required:
1a. & 1b. Prepare journal entries to record the partners' initial capital investments and their subsequent cash withdrawals.
1c. Determine the partners' shares of income, and then prepare journal entries to close Income Summary and the partners' withdrawals
accounts.
? Determine the balances of the partners' capital accounts as of December 31.
Transcribed Image Text:Exercise 12-7 (Algo) Journalizing partnership transactions LO P2 On March 1, Eckert and Kelley formed a partnership. Eckert contributed $100,000 cash, and Kelley contributed land valued at $80,000 and a building valued at $110,000. The partnership also took Kelley's $90,000 long-term note payable associated with the land and building. The partners agreed to share income as follows: Eckert gets an annual salary allowance of $29,500, both get an annual interest allowance of 12% of their initial capital investment, and any remaining income or loss is shared equally. On October 20, Eckert withdrew $32,000 cash and Kelley withdrew $25,000 cash. First year income was $82,000. Required: 1a. & 1b. Prepare journal entries to record the partners' initial capital investments and their subsequent cash withdrawals. 1c. Determine the partners' shares of income, and then prepare journal entries to close Income Summary and the partners' withdrawals accounts. ? Determine the balances of the partners' capital accounts as of December 31.
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