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Prepare the necessary journal entries for these transactions

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Question - Justice Co. was formed as a partnership on January 1, 2012. The following transactions occurred during the first year of operations.

Jan. 1 The partnership is formed. Smith contributes $200,000 cash. Jones contributes $20,000 cash, land worth $40,000, and also borrowed $7,000 by signing a note payable.

Jan. 31 The partnership made a net income of $10,000. The partnership agreement stipulates that smith will receive 70% and Jones is entitled to 30%.

Feb. 1 Owens joins the partnership by contributing $33,000. The partnership agreement is amended and the distribution is now Smith 50%, Jones 30%, and Owens 20%.

Feb. 28 The partnership made a net income of $30,000.

March 1 Jones has decided to leave the partnership. The partnership agrees to accept Jones resignation and to pay Jones $50,000.

March 30 The partnership lost $5,000 this month. According to the partnership agreement, Smith is responsible for 70% and Owens is responsible for 30%.

April 1 Smith and Owens decide to dissolve the partnership and take their respective capital balances as a final payout.

Required - Prepare the necessary journal entries for these transactions.

Reference no: EM132782961

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