Reference no: EM133000036
On the 1sl July 2009, David Michael and Jennifer Jackson form a partnership to manufacture and sell computer software. The partners agree to the following values after an independent appraisal:
Michael's contributions:
Carrying amount Fair value
Cash $10,000 $10,000
Accounts Receivable $30,000 $25,000
Inventory $70,000 $70,000
Computer Equipment $600,000 $450,000
Accounts Payable $85,000 $85,000
Jackson's contributions:
Carrying amount Fair value
Cash $5,000 $5,000
Computer software $18,000 $100,000
The partnership agreement allocates the partners 10% interest on their capital contributions, annual salaries of $30,000 to Michael and $35,000 to Jackson, with the balance of the profits to be shared equally. The profit of the partnership in the first year is $120,000. The "Fixed Capital Accounts Method" is used.
Required:
Problem a) Provide entries using a general journal format to record the commencement of the partnership.
Problem b) Calculate the total partnership share for each of the partners
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