question 1) Journalize the formation of this partnership. M. Jaren and P. Mohan are forming a...

question 1) Journalize the formation of this partnership.

M. Jaren and P. Mohan are forming a partnership on May 1. M. Jaren brings with her $10300 cash and an automobile that was purchased for $30,000. Accumulated amortization on the automobile is $9000.

P. Mohan brings with him $4400 cash, and land with a fair market value of $60,000. The partners agree that the fair market value of the automobile is $20500.

question 2) R. Ross and M. Mike have a partnership that has earned a net income of $90000 this year. It is now December 31.

Journalize the allocation of net income to each partner based on the following scenarios:

a) Ross and Mike divide the profits equally.

b) Ross has a capital balance of $6000 and Mike has a capital balance of $40,000. They each get paid a salary of $5000, earn 10% interest from their capital balances, and the remainder of net income is divided equally.

question 3) R. Zane and S. Kris are partners. According to their partnership agreement, they each earn a salary of $10,000 each year, and income is split 4:3 between Zane and Kris, respectively.

Their business suffered a loss of $57500 this past year. It is now December 31.

Solutions

Expert Solution

Question 1

Date	Account	Debit	Credit
May 1	Bank	10300
	Automobile	20500
	M. Jaren's Capital Account		30800
	(Being Capital introduced by M. Jaren)

May 1	Bank	4400
	Land	60000
	P. Mohan's Capital Account		64400
	(Being Capital introduced by P.Mohan)

Question 2

Net Income	90000
Less: Salary (5000 * 2)	10000
Less: Interest on Capital
Ross: 6000 * 10%	600
Mike: 40000 * 10%	4000
Net profit for distribution	75400

Journal

Date	Account	Debit	Credit
Dec 31	Profit & Loss Appropriation Account	75400
	Ross's Capital A/c		37700
	Mike's Capital A/c		37700
	(Being profits distributed equally among partners)

Question 3

Business Loss	57500
Less: Salary to partners	20000
Net Profit/(Loss)	(77500)

Journal:

Date	Account	Debit	Credit
Dec 31	Zane Capital A/c	44286
	Kris Capital A/c	33214
	Profit & Loss Appropriation Account		77500
	(Being loss distributed in ratio 4:3 among partners)

ekkarill92 answered 1 year ago

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