On March 1, Eckert and Kelley formed a partnership. Eckert contributed $92,000 cash, and Kelley contributed...

On March 1, Eckert and Kelley formed a partnership. Eckert contributed $92,000 cash, and Kelley contributed land valued at $73,600 and a building valued at $103,600. The partnership also took Kelley’s $82,000 long-term note payable associated with the land and building. The partners agreed to share income as follows: Eckert gets an annual salary allowance of $31,500, both get an annual interest allowance of 8% of their initial capital investment, and any remaining income or loss is shared equally. On October 20, Eckert withdrew $31,000 cash and Kelley withdrew $24,000 cash. After adjusting and closing entries are made to the revenue and expense accounts at December 31, the Income Summary account had a credit balance of $76,000.

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

Expert Solution

Refer to the below images for the above mentioned questions, in a detailed way of solution with calculations.

ekkarill92 answered 2 years ago

On March 1, Eckert and Kelley formed a partnership. Eckert contributed $74,000 cash, and Kelley contributed...

On March 1, Eckert and Kelley formed a partnership. Eckert contributed $74,000 cash, and Kelley contributed land valued at $59,200 and a building valued at $89,200. The partnership also took Kelley’s $64,000 long-term note payable associated with the land and building. The partners agreed to share income as follows: Eckert gets an annual salary allowance of $31,000, both get an annual interest allowance of 10% of their initial capital investment, and any remaining income or loss is shared equally. On...

On March 1, Eckert and Kelley formed a partnership. Eckert contributed $94,000 cash, and Kelley contributed...

On March 1, Eckert and Kelley formed a partnership. Eckert contributed $94,000 cash, and Kelley contributed land valued at $75,200 and a building valued at $105,200. The partnership also took Kelley’s $84,000 long-term note payable associated with the land and building. The partners agreed to share income as follows: Eckert gets an annual salary allowance of $29,500, both get an annual interest allowance of 10% of their initial capital investment, and any remaining income or loss is shared equally. On...

On March 1, Eckert and Kelley formed a partnership. Eckert contributed $81,000 cash, and Kelley contributed...

On March 1, Eckert and Kelley formed a partnership. Eckert contributed $81,000 cash, and Kelley contributed land valued at $64,800 and a building valued at $94,800. The partnership also took Kelley’s $71,000 long-term note payable associated with the land and building. The partners agreed to share income as follows: Eckert gets an annual salary allowance of $29,000, both get an annual interest allowance of 9% of their initial capital investment, and any remaining income or loss is shared equally. On...

On March 1, 2017, Eckert and Kelley formed a partnership. Eckert contributed $80,000 cash and Kelley...

On March 1, 2017, Eckert and Kelley formed a partnership. Eckert contributed $80,000 cash and Kelley contributed land valued at $64,000 and a building valued at $94,000. The partnership also assumed responsibility for Kelley’s $70,000 long-term note payable associated with the land and building. The partners agreed to share income as follows: Eckert is to receive an annual salary allowance of $31,500, both are to receive an annual interest allowance of 12% of their beginning-year capital investment, and any remaining...

On March 1, 2017, Eckert and Kelley formed a partnership. Eckert contributed $73,000 cash and Kelley...

On March 1, 2017, Eckert and Kelley formed a partnership. Eckert contributed $73,000 cash and Kelley contributed land valued at $58,400 and a building valued at $88,400. The partnership also assumed responsibility for Kelley’s $63,000 long-term note payable associated with the land and building. The partners agreed to share income as follows: Eckert is to receive an annual salary allowance of $30,000, both are to receive an annual interest allowance of 9% of their beginning-year capital investment, and any remaining...

fundamental accounting principle On March 1, Eckert and Kelley formed a partnership. Eckert contributed $74,000 cash,...

fundamental accounting principle On March 1, Eckert and Kelley formed a partnership. Eckert contributed $74,000 cash, and Kelley contributed land valued at $59,200 and a building valued at $89,200. The partnership also took Kelley’s $64,000 long-term note payable associated with the land and building. The partners agreed to share income as follows: Eckert gets an annual salary allowance of $31,000, both get an annual interest allowance of 10% of their initial capital investment, and any remaining income or loss is...

On May 1, Gosworth and Jordan formed a partnership. Gosworth contributed cash of $100,000 and equipment...

On May 1, Gosworth and Jordan formed a partnership. Gosworth contributed cash of $100,000 and equipment valued at $142,000. Jordan contributed land valued at $130,000 and a building valued at $250,000. The partnership also assumed responsibility for Jordan's $120,000 long-term note payable associated with the land and building. The partners agreed to share income as follows: Gosworth is to receive a salary allowance of $38,000, both are to receive an annual interest allowance of 8% of their beginning-year capital investments,...

1. R and D formed a partnership on February 10, 2020. R contributed cash of $150,000,...

1. R and D formed a partnership on February 10, 2020. R contributed cash of $150,000, while D contributed inventory with a fair value of $120,000. Due to R's expertise in selling, D agreed that R should have 60 percent of the total capital of the partnership. R and D agreed to recognize goodwill. Give journal entries for the partnership formation 2. Luqmaan and Idris drafted a partnership agreement that lists the following assets contributed at the partnership's formation: Contributed...

The MN Partnership was formed by Morgan and Nate. Morgan contributed $45,000 cash for a 50%...

The MN Partnership was formed by Morgan and Nate. Morgan contributed $45,000 cash for a 50% partnership interest. Nate contributed property with a tax basis of $23,000 and a value of $45,000 for a 50% interest. 1. Assume the MN Partnership holds the property contributed by Nate for two years before its sale. (Assume straight-line depreciation and five years left on the recovery period.) How much annual depreciation will each partner have per the books and per the tax allocation...

Luis and Jennifer formed the JL Partnership as equal partners. Each partner contributed cash and property...

Luis and Jennifer formed the JL Partnership as equal partners. Each partner contributed cash and property with a value of $80,000 for partnership operations. As a result of these contributions, Luis had a basis of $80,000 and Jennifer a basis of $60,000 in their partnership interests. At the end of their first year of operations, they had the following results: Gross sales $110,000 Cost of goods sold 75,000 Rent expense 18,000 Employees’ salaries 20,000 Utilities 3,000 Charitable contribution 500 Section...

Question