Need accounting help

Mount Washington College

Accounting II - Quiz 5

C. Frederico, Instructor

Question 1

On March 1, Jones and Houston formed a partnership. Jones and Houston each contributed to the partnership as follows:

Fair Market Valuation Per Books

Jones Cash $ 15,000 $ 15,000 Accounts Receivable $ 47,000 $ 50,000 Inventory $ 65,000 $ 57,000 Equipment $ 40,000 $ 150,000 Accum. Depreciation $ 105,000 Accounts Payable $ 5,000 $ 5,000 Notes Payable $ 20,000 $ 20,000

Houston Cash $ 25,000 $ 25,000 Accounts Receivable $ 55,000 $ 54,000 Inventory $ 75,000 $ 80,000 Equipment $ 35,000 $ 125,000 Accum. Depreciation $ 100,000 Accounts Payable $ 35,000 $ 35,000

Required: Prepare the journal entries to record the initial investment of the partners.

Mount Washington College

Accounting II - Quiz 5

Question 2

Westbrook and Tomlinson formed a partnership by investing $75,000 and $50,000 respectively. During its first year, the partnership earned $80,000. The partnership agreement has the following income sharing plan:

1. Westbrook is to receive a $20,000 per year based on service. Tomlinson is to receive a $30,000 per year based on service. 2. 10% interest allowance on their initial investments. 3. Remaining to be divided equally.

Required: A. Prepare the calculation to show how the income for the first year is to be divided. B. Journalize the entry to close the income summary account at the end of the first year.

Mount Washington College

Accounting II - Quiz 5

Question 3

The partnership of Moats, Jones & Jackson is going out of business. The partnership shares income and losses in a ratio of 3:2:1. On May 2, after discontinuing operations of the partnership and closing the accounts, the following trial balance in summary form was prepared:

Dr. Cr. Cash $ 25,000 Noncash assets $ 80,000 Liabilities $ 22,000 Moats, Capital $ 28,000 Jones, Capital $ 22,000 Jackson, Capital $ 33,000

$ 105,000 $ 105,000

The partners are able to sell the noncash assets for $85,000 and payoff the debts of $22,000.

Required: A. Prepare a schedule to show the distribution of cash at liquidation using the accounting equation format (any deficits are absorbed by the other partners):

|-----------------Capital------------------| Cash + Noncash = Liabilites + Moats + Jones + Jackson

B. Journalize each step of the liquidation process.

Mount Washington College

Accounting II - Quiz 5

Question 4

Fitzgerald and Johnson, who have capital accounts of $55,000 and $95,000 respectively, have operated a successful firm for many years, sharing net income and losses equally. Moulds is to be admitted to the partnership with an investment of $60,000 in return for which he will receive a 30% interest in the partnership.

Required Journalize the entry to reflect this transaction.