Reference no: EM13611400

Jane & Joan form a partnership by combining the assets of theirseparate businesses. Jane contributes accounts receivablewith a face amount of $50,000 & equipment with a cost of$190,000 and accumulated depreciation of $100,000. Thepartners agree that the equipment is to be priced at $85,000, that$3,500 of the accounts receivable are completely worthless and arenot to be accepted by the partnership, and that $1,500 is areasonable allowance for the uncollectibility of the remainingaccounts receivable. Joan contributes cash of $30,000 andmerchandise inventory of $59,500. The partners agree that themerchandise inventory is to be priced at $61,000. Journalizethe entries to record in the partnership accounts (a) Jane'sinvestment & (b) Joan's investment.

C and D had capital balances of $60,000 and $120,000 respectivelyon January 1 of the current year. On May 8, C invested anadditional $10,000 in the partnership. During the year, C andD withdrew $25,000 and $35,000 repspectively. After closingall expense and revenue accounts at the end of the year, IncomeSummary has a credit balance of $90,000. The net income isdivided in the ratio of 2:3 after a salary allowance of $40,000 toC.

(a) Journalize the entries to close the Income summaryaccount and the drawing accounts.

(b) Prepare the statement of owner's equity for the currentyear.

David and Warren had captial balances of $140,000 and $160,000respectively at the beginning of the current fiscal year. Thearticles of partnership provide for salary allowances of $25,000and $30,000 respectively, an allowance of interest at 12% on thecaptial balances at the beginning of the year, with the remainingnet income dividided equally. Net income for the current yearwas $120,000.

(a) Present the income division of the income statement forthe current year.

(b) Assuming that the net income had been $50,000 instead of$120,000, present the income division section of the incomestatement for the current year.