Question

The capital accounts of Angel Alvarez and Emma Allison have balances of $47,740 and $71,570, respectively, on January 1, 20Y4, the beginning of the fiscal year. On March 10, Alvarez invested an additional $7,690. During the year, Alvarez and Allison withdrew $31,410 and $39,630, respectively, and net income for the year was $62,000. Revenues were $483,000, and expenses were $421,000. The articles of partnership make no reference to the division of net income.

	Required:
A.	Journalize the entries to close (1) the revenues and expenses and (2) the drawing accounts on December 31. Refer to the Chart of Accounts for exact wording of account titles.
B.	Prepare a statement of partnership equity for the current year for the partnership of Alvarez and Allison. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.

Journal

A. Journalize the entries to close (1) the revenues and expenses and (2) the drawing accounts on December 31. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 10

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1		Closing Entries
2
3
4
5
6
7
8
9

Statement of Partnership Equity

B. Prepare a statement of partnership equity for the current year for the partnership of Alvarez and Allison. Refer to the information given and the list of Amount Descriptions provided for the exact wording of the answer choices for text entries. If there is a decrease in partner’s equity, enter that amount as a negative number using a minus sign.

ALVAREZ AND ALLISON

Statement of Partnership Equity

For the Year Ended December 31, 20Y4

1		Angel Alvarez, Capital	Emma Allison, Capital	Total Partnership Capital
2
3
4
5
6

Answer 1

A.	Journal Entries:-
(1)	Date	Description	Post Ref.	Debit	Credit	Assets	Liabilities	Equity
	December, 31 ,2004	Income Summary		62,000				- 62,000
		Angel Alvarez, capital			31,000			+ 31,000
		Emma Allison, capital			31,000			+ 31,000
		( no agreement- Equal sharing)
(2)	December, 31 ,2004	Angel Alvarez, capital		31,410				- 31,410
		Emma Allison, capital		39,630				- 39,630
		Angel Alvarez, Drawing			31,410	- 31,410
		Emma Allison, Drawing			39,630	- 39,630

B.	Statement of Partnership Equity
		Angel Alvarez, Capital	Emma Allison, Capital	Total Partnership Capital
1	Opening Capital	47,740	71,570	119,310
2	Income distribution	31,000	31,000	62,000
3	Drawings	-31,410	-39,630	-71,040
	Total	47,330	62,940	110,270