Chapter 12, Problem 12.1BPR

1.

To determine

Partnership

It is that form of organization which is owned and managed by two or more persons who invest and share the profits and losses according to a pre-determined ratio.

Forming a Partnership

While forming the partnership, the contribution of assets by partners are debited to the partnership assets account; whereas the liabilities of the partnerships are credited to the partnership’s liabilities account, and the net amount of the investments of partners are credited to the partners’ individual capital account.

To record:  The journal entry for L and C’s investment in the partnership.

2.

To determine

To prepare: The balance sheet on April 1, 2015, on the date of formation of partnership.

3.

To determine

To provide: The journal entries to close the Income Summary and expenses and drawing accounts at March 31, 2016.