Chapter 12, Problem P12.29APGA

To determine

Concept Introduction:

Partnership: Partnership is one of the types of business origination. Under the partnership, two or more individuals agree to form a business together and share losses and profits in the predetermined ratio.

Allocation of profits: A partnership contract usually provides for the allocation of profit or losses amongst the partners. In the case of absence of allocation method, the partnership net income or losses are allocated equally amongst the partners.

Closing Entries: Closing entries is the process of closing temporary accounts at the end of year. Closing entries are prepared after preparing the adjusted trial balance. In the process of closing entries following steps are follows in the form of journal entries:

1. Closing all revenue accounts by debiting the revenue accounts and crediting Income Summary Account.
2. Closing all expenses by debiting the Income Summary accounts and crediting all expenses accounts.
3. Closing the net income by debiting the Income Summary accounts and crediting Capital or Retained earrings account.
4. Closing the withdrawals accounts by debiting the Capital or Retained earrings account and crediting the withdrawal account.

Requirement-1:

To prepare: Closing entries for the Partnership as on June 30

To determine

Requirement-2:

To determine: The ending capital balance of each partner using partner’s capital T account

To determine

Requirement-3:

To prepare: The Liquidation journal entries for the partnership