Prepare schedules that compute the balances in each partner's capital account at the end of each of the first two years of partnership operations.

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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A partnership begins its first year of operations with the following capital balances:
$ 110,000
80,000
110,000
Allegan, Capital
Berrien, Capital
Kent, Capital
According to the articles of partnership, all profits will be assigned as follows:
Allegan will be awarded an annual salary of $20,000 with $10,000 assigned to Kent.
• The partners will be attributed interest equal to 10 percent of the capital balance as of the first day of the year.
●
The remainder will be assigned on a 5:2:3 basis, respectively.
• Each partner is allowed to withdraw up to $10,000 per year.
The net loss for the first year of operations is $20,000, and net income for the subsequent year is $40,000. Each partner withdraws
the maximum amount from the business each period.
Required:
Prepare schedules that compute the balances in each partner's capital account at the end of each of the first two years of partnership
operations.
Transcribed Image Text:A partnership begins its first year of operations with the following capital balances: $ 110,000 80,000 110,000 Allegan, Capital Berrien, Capital Kent, Capital According to the articles of partnership, all profits will be assigned as follows: Allegan will be awarded an annual salary of $20,000 with $10,000 assigned to Kent. • The partners will be attributed interest equal to 10 percent of the capital balance as of the first day of the year. ● The remainder will be assigned on a 5:2:3 basis, respectively. • Each partner is allowed to withdraw up to $10,000 per year. The net loss for the first year of operations is $20,000, and net income for the subsequent year is $40,000. Each partner withdraws the maximum amount from the business each period. Required: Prepare schedules that compute the balances in each partner's capital account at the end of each of the first two years of partnership operations.
Required:
Prepare schedules that compute the balances in each partner's capital account at the end of each of the first two years of partnership
operations.
Ending Capital Ending Capital
Balance Year Balance Year
One
Two
Prepare schedules that compute the balances in each partner's capital account at the end of Year One of partnership
operations.
Note: Amounts to be deducted should be indicated with minus sign.
Beginning capital
Net loss
Drawings
Ending capital
Ending Capital Ending Capital
Balance Year Balance Year
One
Two
Beginning capital
Net income
ALLEGAN, BERRIEN, and KENT
Statement of Partner's Capital
For the Year One
Allegan
Drawings
$
Ending capital
$
110,000 $
< Ending Capital Balance Year One
110,000 $
$
Berrien
80,000 $
< Ending Capital Balance Year One
ALLEGAN, BERRIEN, and KENT
Statement of Partner's Capital
For the Year Two
Allegan
0 $
80,000 $ 110,000 $
Required:
Prepare schedules that compute the balances in each partner's capital account at the end of each of the first two years of partnership
operations.
Kent
Prepare schedules that compute the balances in each partner's capital account at the end of Year Two of partnership
operations.
Note: Amounts to be deducted should be indicated with minus sign.
110,000 $
Berrien
Ending Capital Balance Year Two
0 $
Kent
Total
$
GA
300,000
0 $
300,000
0
0
Total
Ending Capital Balance Year Two
0
0
my
O
0
Transcribed Image Text:Required: Prepare schedules that compute the balances in each partner's capital account at the end of each of the first two years of partnership operations. Ending Capital Ending Capital Balance Year Balance Year One Two Prepare schedules that compute the balances in each partner's capital account at the end of Year One of partnership operations. Note: Amounts to be deducted should be indicated with minus sign. Beginning capital Net loss Drawings Ending capital Ending Capital Ending Capital Balance Year Balance Year One Two Beginning capital Net income ALLEGAN, BERRIEN, and KENT Statement of Partner's Capital For the Year One Allegan Drawings $ Ending capital $ 110,000 $ < Ending Capital Balance Year One 110,000 $ $ Berrien 80,000 $ < Ending Capital Balance Year One ALLEGAN, BERRIEN, and KENT Statement of Partner's Capital For the Year Two Allegan 0 $ 80,000 $ 110,000 $ Required: Prepare schedules that compute the balances in each partner's capital account at the end of each of the first two years of partnership operations. Kent Prepare schedules that compute the balances in each partner's capital account at the end of Year Two of partnership operations. Note: Amounts to be deducted should be indicated with minus sign. 110,000 $ Berrien Ending Capital Balance Year Two 0 $ Kent Total $ GA 300,000 0 $ 300,000 0 0 Total Ending Capital Balance Year Two 0 0 my O 0
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