On June 1, 2017, Jill Bow and Aisha Amri formed a partnership,to open a commercial gluten-free bakery, contributing $291,000 cashand $382,000 of equipment, respectively. Also, the partnershipassumed responsibility for a $51,000 note payable associated withthe equipment. The partners agreed to share profits as follows: Bowis to receive an annual salary allowance of $161,000, both are toreceive an annual interest allowance of 5% of their originalcapital investments, and any remaining profit or loss is to beshared 40/60 (to Bow and Amri, respectively). On November 20, 2017,Amri withdrew cash of $111,000. At year-end, May 31, 2018, theIncome Summary account had a credit balance of $490,000. On June 1,2018, Peter Wilems invested $131,000 and was admitted to thepartnership for a 20% interest in equity. Required: 1. Preparejournal entries for the following dates. a. June 1, 2017
Record the formation of partnership.
b. November 20, 2017
Record the withdrawal by partner.
c. May 31, 2018
Record the closing of profit to capital.
d. June 1, 2018
Record the admission of Wilems for a 20% interest.
2. Calculate the balance in each partnerâscapital account immediately after the June 1, 2018, entry.
Bow,capital AishaAmri, capital Wilems, capital
On June 1, 2017, Jill Bow and Aisha Amri formed a partnership,to open a commercial gluten-free bakery, contributing $291,000 cashand $382,000 of equipment, respectively. Also, the partnershipassumed responsibility for a $51,000 note payable associated withthe equipment. The partners agreed to share profits as follows: Bowis to receive an annual salary allowance of $161,000, both are toreceive an annual interest allowance of 5% of their originalcapital investments, and any remaining profit or loss is to beshared 40/60 (to Bow and Amri, respectively). On November 20, 2017,Amri withdrew cash of $111,000. At year-end, May 31, 2018, theIncome Summary account had a credit balance of $490,000. On June 1,2018, Peter Wilems invested $131,000 and was admitted to thepartnership for a 20% interest in equity. Required: 1. Preparejournal entries for the following dates. a. June 1, 2017
Record the formation of partnership.
b. November 20, 2017
Record the withdrawal by partner.
c. May 31, 2018
Record the closing of profit to capital.
d. June 1, 2018
Record the admission of Wilems for a 20% interest.
2. Calculate the balance in each partnerâscapital account immediately after the June 1, 2018, entry.
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