A partnership begins its first year of operations with the following capital balances:$ 110,00080,000110,000Allegan, CapitalBerrien, CapitalKent, CapitalAccording 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 $40,000. Each partner withdrawsthe maximum amount from the business each period.Required:Prepare schedules that compute the balances in each partner's capital account at the end of each of the first two years of partnershipoperations. Required:Prepare schedules that compute the balances in each partner's capital account at the end of each of the first two years of partnershipoperations.Ending Capital Ending CapitalBalance Year Balance YearOneTwoPrepare schedules that compute the balances in each partner's capital account at the end of Year One of partnershipoperations.Note: Amounts to be deducted should be indicated with minus sign.Beginning capitalNet lossDrawingsEnding capitalEnding Capital Ending CapitalBalance Year Balance YearOneTwoBeginning capitalNet incomeALLEGAN, BERRIEN, and KENTStatement of Partner's CapitalFor the Year OneAlleganDrawings$Ending capital$110,000 $< Ending Capital Balance Year One110,000 $$Berrien80,000 $< Ending Capital Balance Year OneALLEGAN, BERRIEN, and KENTStatement of Partner's CapitalFor the Year TwoAllegan0 $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 partnershipoperations.KentPrepare schedules that compute the balances in each partner's capital account at the end of Year Two of partnershipoperations.Note: Amounts to be deducted should be indicated with minus sign.110,000 $BerrienEnding Capital Balance Year Two0 $KentTotal$GA300,0000 $300,00000TotalEnding Capital Balance Year Two00myO0

In partnership business each individual comes together and provide there share in form of capital…

Answered: Prepare schedules that compute the…

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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Question

100%

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

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