On March 2, 2020, Zoe Moreau, Karen Krneta, and Veronica Visentin start a partnership to operate a
Question:
On March 2, 2020, Zoe Moreau, Karen Krneta, and Veronica Visentin start a partnership to operate a personal coaching and lifestyle consulting practice for professional women. Zoe will focus on work-life balance issues, Karen on matters of style, and Veronica on health and fitness. They sign a partnership agreement to split profits in a 3:2:3 ratio for Zoe, Karen, and Veronica, respectively. The following are the transactions for MKV Personal Coaching:
2020Mar. 2 The partners contribute assets to the partnership at the following agreed amounts:
They also agree that the partnership will assume responsibility for Karen?s note payable of $5,000.
Dec. 20 Zoe, Karen, and Veronica each withdraw $30,000 cash as a ?year-end bonus.? No other withdrawals were made during the year.
31 Total profit for 2020 was $110,000.
2021Jan. 5 Zoe and Veronica approve Karen?s request to withdraw from the partnership for personal reasons.
They agree to pay Karen $15,000 cash from the partnership.
6 Zoe and Veronica agree to change their profit-sharing ratio to 4:5, respectively.
Dec. 20 Zoe and Veronica withdraw $42,750 and $45,000 cash, respectively, from the partnership.
31 Total profit for 2021 was $123,750.
2022Jan. 4 Zoe and Veronica agree to admit Dela Hirjikaka to the partnership. Dela will focus on providing training in organizational skills to clients. Dela invests $31,000 cash for 25% ownership of the partnership.
Instructions
a. Record the above transactions. For the profit recognized each year, calculate how it is to be allocated and record the closing of the Income Summary account.
b. Prepare the partners? equity section of the balance sheet after Dela is admitted to the partnership.
Taking It Further
Every time a new partner is admitted to a partnership or a partner withdraws from a partnership, it is necessary to completely close the accounting records of the existing partnership and start new accounting records for the new partnership. Do you agree or disagree? Explain.
Balance SheetBalance 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...
Step by Step Answer:
a 2020 Mar 2 Cash 15000 Equipment 18000 Z Moreau Capital 33000 Invest assets in business 2 Cash 10000 Furniture 17000 Notes Payable 5000 K Krneta Capital 22000 Invest assets in business 2 Cash 20000 E...View the full answer
Accounting Principles Volume 2
ISBN: 978-1119502555
8th Canadian Edition
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak
