Solution-Journalize the allocation of the loss from income

Journalize the allocation of the loss from income summary

Reference no: EM13527516

Account for partner investments, allocating profits and losses to the partners

This exercise is related to the Lawlor Lawn Service situation started in Chapter 1. Lawlor has decided to start a pressure washing business with her buddy Tanya. This will be a separate business from Lawlor Lawn Service. Lawlor and Tanya will be partners in the pressure washing business. Lawlor will contribute cash of $1,000 and a pressure washing machine that cost Lawlor $1,800 but has current market value of only $1,500. Tanya will contribute supplies of $500 and a storage building that cost $2,000 but has current market value of $2,200. They form the LT Pressure Washing Company on March 1, 2013. Lawlor and Tanya agree to share profits and losses 4:3, respectively.

Requirements

1. Journalize the investment of both partners in the LT Pressure Washing Company on March 1, 2013.

2. The partnership recorded a loss of $700 for March, 2013. Journalize the allocation of the loss from Income summary.

3. What are the balances in Lawlor and Tanya's capital accounts on March 31? Prepare T-accounts to answer the question.

Reference no: EM13527516

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Journalize the allocation of the loss from income summary

Reference no: EM13527516

Reference no: EM13527516

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