Reference no: EM132668456
January 1, 2018 - Mahomes joins the partnership. He is anxious to join and agrees to pay $46,000 for a 20% share of the business, with the bonus to the existing partners. Rodgers, Brady, and Mahomes agree to salaries of $5,000 for each partner, and a 5:4:3 income ratio.
Required: Show the entry to admit the new partner into the business.
December 31, 2018 - The business recorded a net income of $30,000. Rodgers had drawings of $20,000 and Brady had drawings of $4,000.
Required:
Problem a. Show the entry to allocate the net income to the partners' capital accounts
Problem b. Prepare a Statement of Partners' Equity for 2018.
January 1, 2019 - Brady decides to leave the partnership. Mahomes agrees to pay Brady $73,000 in a private transaction. The result is that all of Brady's equity will be transferred to Mahomes. The income or loss will now be divided between Rodgers and Mahomes in a 50%, 50% ratio. The partners no longer receive a salary.
Required: Show the entry to record the departure of Brady.
December 31, 2019 - The business recorded a net loss of $46,000. Mahomes had drawings of $20,834.
Required:
Problem a. Show the entry to allocate the net loss to the partners' capital accounts.
Problem b. Prepare a Statement of Partners' Equity for 2019.
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