Tom and Julie formed a management consulting partnership on January 1, 2016. The fair value of the net assets invested by each partner follows: Tom Julie Cash $12,600 $11,200 Accounts receivable 7,400 5,700 Office supplies 2,100 900 Office equipment 32,600 — Land — 32,200 Accounts payable 2,200 5,500 Mortgage payable — 19,100 During the year, Tom withdrew $16,000 and Julie withdrew $12,800 in anticipation of operating profits. Net profit for 2016 was $46,200, which is to be allocated based on the original net capital investment. (a) Your answer is correct. Prepare journal entries to: 1. Record the initial investment in the partnership. 2. Record the withdrawals 3. Close the Income Summary and Drawing accounts. (Round intermediate calculations to 6 decimal places, e.g. 1.576843 answers to 0 decimal places, e.g. 5,125. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) No. Account Titles and Explanation Debit Credit 1. (To record initial investment by Tom) (To record initial investment by Julie) 2. (To record Tom's drawings) (To record Julie's drawings) 3. (To close income summary account) (To close drawings accounts) (b) Prepare a statement of changes in partners’ capital for the year ended December 31, 2016. (Round answers to 0 decimal places, e.g. 5,125. List items that increase partners' capital first.)

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)


	Your answer is correct.

Prepare journal entries to:

1.		Record the initial investment in the partnership.
2.		Record the withdrawals
3.		Close the Income Summary and Drawing accounts.

(Round intermediate calculations to 6 decimal places, e.g. 1.576843 answers to 0 decimal places, e.g. 5,125. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

No.	Account Titles and Explanation	Debit	Credit
1.





	(To record initial investment by Tom)







	(To record initial investment by Julie)
2.

	(To record Tom's drawings)


	(To record Julie's drawings)
3.


	(To close income summary account)




	(To close drawings accounts)

(b)

Prepare a statement of changes in partners’ capital for the year ended December 31, 2016. (Round answers to 0 decimal places, e.g. 5,125. List items that increase partners' capital first.)

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