Determine balances of the partners capital accounts

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Reference no: EM13144352

On March 1, 2011, Abbey and Dames formed a partnership. Abbey contributed $88,000 cash and Dames contributed land valued at $70,000 AND a building valued at $100,000. The partnership also assumed responsibility for Dames $80,000 long-term note payable associated with the land and building. The partners agree to share income as follows:

Abbey is to receive an annual interest allowance of 10% of their beginning-year capital investment, and any REMAINING income or loss is to be shared equally.

On October 20, 2011, Abbey withdrew $32,000 cash and Dames withdrew $25,000 cash. After adjusting and closing entries are made to the revenue and expense accounts at December 31st, 2011, the Income Summary Account had a credit balance of $79,000.
Prepare Journal Entries to record
The partners capital investments

Their cash withdrawals

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The December 31 closing of both the Withdrawals and Income Summary accounts.

Determine the balances of the partners CAPITAL accounts as of December 31, 2011

Reference no: EM13144352

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