Reference no: EM132473797

Point 1: Bob Spade and Ken Lundy have formed the partnership Art World, and have capital balances of $ 120,000 and $ 105,000, respectively on January 1, 2021. On June 1, 2021, Lundy invested an additional $ 20,000. Also, during the year, Spade withdrew $ 16,000 and Lundy withdrew $ 22,000. Sales for the year amounted to $ 850,000 and expenses were $ 520,000. After taking salary allowances of $ 60,000 and $ 90,000, respectively, Spade and Lundy share any remaining profit and losses on a 40% and 60% ratio, respectively.

Instructions

Question a) Prepare a schedule that shows the division of profit to each partner.

Question b) Prepare the closing entries at December 31, 2021, for the Art World partnership.

Question c) Prepare a statement of partners' equity for 2021.

Point 2: At September 30, 2021, C. Saber and J. Wong, the two partners of City Landscaping, had capital account balances of $ 25,000 each. D. Walker joined the partnership on September 30, 2021 and received a 1/3 interest in the partnership in exchange for a capital contribution of $ 40,000.

For the year ended September 30, 2022, City Landscaping had profit of $ 126,000, which is allocated equally to the three partners. Withdrawals during the year were $ 18,000 each by Saber and Wong, and $ 14,000 by Walker.

Instructions

Question a) Record the transaction on September 30, 2021 admitting Walker into the partnership.

Question b) Calculate the balance of each partner's capital account after the transaction.

Attachment:- partnership.rar