On June 1, 2023, Jill Bow and Aisha Adams formed a partnership to open a gluten-free commercial bakery, contributing $294,000 cash and $388,000 of equipment, respectively. The partnership also assumed responsibility for a $54,000 note payable associated with the equipment. The partners agreed to share profits as follows: Bow is to receive an annual salary allowance of $164,000, both are to receive an annual interest allowance of 10% of their original capital investments, and any remaining profit or loss is to be shared 40/60 (to Bow and Adams, respectively). On November 20, 2023, Adams withdrew cash of $114,000. At year-end, May 31, 2024, the Income Summary account had a credit balance of $520,000. On June 1, 2024, Peter Williams invested $134,000 and was admitted to the partnership for a 20% interest in equity.
Prepare journal entries for the following dates.
a. June 1, 2023
November 20, 2023
Calculate the balance in each partner’s capital account immediately after the June 1, 2024, entry.
On June 1, 2023, Jill Bow and Aisha Adams formed a partnership to open a gluten-free commercial bakery, contributing $294,000 cash and $388,000 of equipment, respectively. The partnership also assumed responsibility for a $54,000 note payable associated with the equipment. The partners agreed to share profits as follows: Bow is to receive an annual salary allowance of $164,000, both are to receive an annual interest allowance of 10% of their original capital investments, and any remaining profit or loss is to be shared 40/60 (to Bow and Adams, respectively). On November 20, 2023, Adams withdrew cash of $114,000. At year-end, May 31, 2024, the Income Summary account had a credit balance of $520,000. On June 1, 2024, Peter Williams invested $134,000 and was admitted to the partnership for a 20% interest in equity.
Prepare journal entries for the following dates.
a. June 1, 2023
November 20, 2023
Calculate the balance in each partner’s capital account immediately after the June 1, 2024, entry.
Related questions
Kramer and Knox began a partnership by investing $70,000 and$76,000, respectively. The partners agreed to share net income andloss by granting annual salary allowances of $51,500 to Kramer and$41,500 to Knox, 12% interest allowances on their investments, andany remaining balance shared equally.
| 1. | Determine the partnersâ shares of Kramer and Knox given afirst-year net income of $89,800. Kramer Knox net income-89800 salary allowances balance of income(loss) interest allowances balance of income(loss) balance allocated equally balance of income(loss) shares of the partners
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