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Sharp and Townson had capital balances of $60,000 and $120,000respectively on January 1 of the current year. On May 8, Sharpinvested an additional $10,000 in the partnership. During the year,Sharp and Townson withdrew $25,000 and $45,000 respectively. Afterclosing all expense and revenue accounts at the end of the year,Income Summary has a credit balance of $90,000, that Sharp andTownson have agreed to split on a 2:1 basis, respectively.
(a) Journalize the entries to close the income summary account andthe drawing accounts.
(b) Prepare the statement of owner's equity for the currentyear.

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Elin Hessel
Elin HesselLv2
28 Sep 2019

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sharp and townson had capital balances of 60,000 and 120,000 respectively on january 1 of the current year. on may 8, sharp invested an additional 10,000 in the partnership. during the year, sharp and townson withdrew 25,000 and 45,000 respectively. after closing all expense and revenue accounts at the end of the year, income summary has a credit balance of 90,000, that sharp and townson have agreed to split on a 2:1 basis, respectively. Journalize the entries to close the income summary account and the drawing accounts ......

On March 1, 2017, Eckert and Kelley formed a partnership. Eckertcontributed $73,000 cash and Kelley contributed land valued at$58,400 and a building valued at $88,400. The partnership alsoassumed responsibility for Kelley’s $63,000 long-term note payableassociated with the land and building. The partners agreed to shareincome as follows: Eckert is to receive an annual salary allowanceof $30,000, both are to receive an annual interest allowance of 9%of their beginning-year capital investment, and any remainingincome or loss is to be shared equally. On October 20, 2017, Eckertwithdrew $29,000 cash and Kelley withdrew $22,000 cash. After theadjusting and closing entries are made to the revenue and expenseaccounts at December 31, 2017, the Income Summary account had acredit balance of $100,000.

Required:
1a. & 1b. Prepare journal entries to record the partners' initial investmentsand their subsequent cash withdrawals.
1c. Determine the partners' shares of income, and then prepare journalentries to close Income Summary and the partners' Withdrawalsaccounts.
2. Determine the balances of the partners’ capital accounts as ofDecember 31, 2017.

In the early part of 2018, the partners of Hugh, Jacobs, and Thomas sought assistance from a local accountant. They had begun a new business in 2017 but had never used an accountant’s services.

Hugh and Jacobs began the partnership by contributing $155,000 and $105,000 in cash, respectively. Hugh was to work occasionally at the business, and Jacobs was to be employed full-time. They decided that year-end profits and losses should be assigned as follows:

Each partner was to be allocated 10 percent interest computed on the beginning capital balances for the period.

A compensation allowance of $8,000 was to go to Hugh with a $25,000 amount assigned to Jacobs.

Any remaining income would be split on a 4:6 basis to Hugh and Jacobs, respectively.

In 2017, revenues totaled $180,000, and expenses were $149,000 (not including the partners’ compensation allowance). Hugh withdrew cash of $9,000 during the year, and Jacobs took out $14,000. In addition, the business paid $8,000 for repairs made to Hugh’s home and charged it to repair expense.

On January 1, 2018, the partnership sold a 10 percent interest to Thomas for $42,000 cash. This money was contributed to the business with the bonus method used for accounting purposes.

c.What journal entries should the partnership have recorded on December 31, 2017?

d.What journal entry should the partnership have recorded on January 1, 2018?

question c:

1

Record entry to reclassify payment made to repair personal residence.

2

Record entry to close drawings accounts for 2017.

3

Record entry to close revenue and expense accounts for 2017.

4

Record the distribution of net income to partners.

question d:

1

Record the payment made by Thomas using the bonus method.

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