ACCOUNTING FOR PARTNERSHIPS

ACCOUNTING FOR PARTNERSHIPS: 4 Questions

On March 1, 2011, Abbey and Dames formed a partnership. Abbey contributed $88,000 cash and Dames contributed land valued at $70,000 AND a building valued at $100,000. The partnership also assumed responsibility for Dames $80,000 long-term note payable associated with the land and building. The partners agree to share income as follows:
Abbey is to receive an annual interest allowance of 10% of their beginning-year capital investment, and any REMAINING income or loss is to be shared equally.
On October 20, 2011, Abbey withdrew $32,000 cash and Dames withdrew $25,000 cash. After adjusting and closing entries are made to the revenue and expense accounts at December 31st, 2011, the Income Summary Account had a credit balance of $79,000.
Prepare Journal Entries to record
• The partners’ capital investments
• Their cash withdrawals
• The December 31 closing of both the Withdrawals and Income Summary accounts.
• Determine the balances of the partners’ CAPITAL accounts as of December 31, 2011



Cosmo and Ellis began a partnership by investing $50,000 and $75,000, respectively. They agreed to share net income and loss by granting annual allowances of $55,000 to Cosmo and $45,000 to Ellis, 10% interest allowances on their investments, and any remaining balance shared equally.
• Determine the partners’ shares of Cosmo and Ellis given a first year net income of $94,000.
• Determine the partner’s shares of Cosmo and Ellis given a first year net loss of $15,700.


The treed Partnership has total partner’s equity of $510,000, which is made up of Elm, Captial, $400,000, and Oak, Capital, $110,000. The partners share net income and loss in a ratio of 80% to Elm and 20% to Oak. On November 1, Ash is admitted to the partnership and given a 15% interest in equity and a %15 share in any income and loss. Prepare the journal entry to record the admission of Ash under each of the following separate assumptions:
Ash invests cash of:
• $90,000
• $125,000
• $60,000


Allocation Partnership Income:
Kim Ries, Tere Bax, and josh Thomas invested $40,000, $56,000, and $64,000 respectively, in a partnership. During its first calendar year, the firm earned $124,500.
Prepare a journal entry to close the firm’s Income Summary account as of its December 31 year-end and to allocate the $124,500 net income to the partners under each of the following separate assumptions:
The partners:
• Have no agreement on the method of sharing income and loss.
• Agreed to share income and loss in the ratio of their beginning capital investments.
• Agreed to share income and loss by providing annual salary allowances of $33,000 to Ries, $28,000 to Bax, and $40,000 to Thomas; granting 10% interest on the partners’ beginning capital investments; and sharing the remainder equally.