On January 10, 2016, Jarius Walker and Rae King form a partnership. Walker agrees to invest $18,200

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On January 10, 2016, Jarius Walker and Rae King form a partnership. Walker agrees to invest $18,200 in cash and inventory valued at $48,800. King invests certain business assets at valuations agreed upon, transfers business liabilities, and contributes sufficient cash to bring her total capital to $60,000. Details regarding the carrying values of the business assets and liabilities and the agreed valuations follow:

King's Ledger Agreed-Upon Balance Valuation $24.100 Accounts Receivable Allowance for Doubtful Accounts Equipment Accumu

The partnership agreement includes the following provisions regarding the division of net income: interest on original investments at 10%, salary allowances of $22,500 (Walker) and $30,400 (King), and the remainder equally.
Instructions
1. Journalize the entries to record the investments of Walker and King in the partner- ship accounts.
2. Prepare a balance sheet as at January 10, 2016, the date of formation of the partner- ship of Walker and King.
3. After adjustments and the closing of revenue and expense accounts at December 31, 2016, the end of the first full year of operations, the income summary account has a credit balance of $80,000, and the withdrawals accounts have debit balances of $22,500 (Walker) and $30,400 (King). Journalize the entries to close the income summary account and the withdrawals accounts at December 31, 2016.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...
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Accounting Volume 2

ISBN: 978-0176509743

2nd Canadian edition

Authors: James Reeve, Jonathan Duchac, Sheila Elworthy, Carl S. Warren

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