Question

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Peobien 115A Partnership entrles, profit allocation, admission of a partner L02,3,4 CHECK FIGURES: c. Cr Bow: $245,200; Cr Amri: $134,800; d. Dr Amri: $48,000 On June 1, 2017, Jill Bow and Aisha Amri formed a partnership, to open a commercial gluten-f ery, contributing $280,000 cash and $360,000 of equipmen sumed responsibility for a $40,000 note payab to share profits as follows: Bow is to receive an annual salary allowance o ceive an annual int profit or loss is to be shared 40/60 (to Bow and Amri, respectively). On November 20, 2017, Amri with- drew cash of of $380,000. On June 1, 2018, Peter Wilems invested $120,000 and was admitted to the partnership for a 20% interest in equity. ree bak- t, respectively. Also, the partnership as- le associated with the equipment. The partners agreed f $150,000, both are to re- erest allowance of 8% of their original capital investments, and any remaining $100,000. At year-end, May 31, 2018, the Income Summary account had a credit balance Required 1. Prepare journal entries for the following dates: a. June 1, 2017 b. November 20, 2017 c. May 31, 2018 d. June 1, 2018 2. Calculate the balance in each partner's capital account immediately after the June 1, 2018, entry.

Answer 1

a.
2011
Jun-01	Cash	280,000
	Equipment	360,000
	Jill Bow, capital		280,000
	Aisha Amri, capital		320,000
	Note payable		40,000
	To record formation of partnership.
b.
2011
Nov. 20	Amri, withdrawals	100,000
	Cash		100,000
	To record withdrawal by partner.
c.
2012
May-31	Income summary	380,000
	Jill Bow, capital		245,200
	Aisha Amri, capital		134,800
	To record closing of net income to capital.
	Supporting calculations:
		Bow	Amri	Total
	Net income			$380,000
	Salary allowance:
	Bow	$150,000
	Interest allowances:
	Bow (8% on $280,000)	22,400
	Amri (8% on $320,000)		$25,600
	Total salary and interest allowances	$172,400	$25,600	-198,000
	Balance of income to be allocated			182,000
	Balance allocated 40/60:
	Bow (40% × $182,000)	72,800
	Amri (60% × $182,000)		109,200
	Total allocated equally			-182,000
	Balance of income	_ _____	___ ___	0
	Shares of the partners	$245,200	$134,800	$380,000
d.
2012
Jun-01	Cash	120,000
	Bow, capital	32,000
	Amri, capital	48,000
	Wilems, capital		200,000
	To record admission of Wilems for a 20% interest.
so we have
	bow capital	$            525,200
	(280000+245200)
	amri capital	$            354,800
	(320000-100000+134800)
	total equity	$            880,000
	cash brought by him	$            120,000
	total equity after admission	$        1,000,000
	new partners share(20%)	$            200,000
	cash brought by him	$         (120,000)
	bonus paid to him	$              80,000
	contrinuted by
	bow(80000*40%)	$              32,000
	amri(80000*60%)	$              48,000