2017
January 1 - Kim and Sing decide to start up a partnership. Kim brings in $20 000 cash and equipment costing $120 000, with $34 000 in the accumulated depreciation account. The fair market value of the equipment is $74 000. Sing brings $108 000 in cash. They agree to an income ratio of 5:4.
December 31 - The business records a net income of $48 000, and Kim has a debit balance of $32 000 in his drawings account.

a) Record the journal entry to establish the partnership.

b) Record the entry to allocate the net income to the partners' capital accounts.

c) Prepare a Statement of Partners' Equity for 2017.

2018
January 1 - Ahmed joins the partnership by contributing $92 000 in cash. A new partnership agreement is drawn up. Kim, Sing and Ahmed agree to salaries of $10 000 for each partner and a 5:4:3 income ratio.
December 31 - The business recorded a net income of $60 000. Kim had drawings of $40 000 and Sing had drawings of $8 000.

a) Record the entry to admit the new partner into the business.

b) Record the entry to allocate the net income to the partners' capital accounts.

c) Prepare a Statement of Partners' Equity for 2018.

2019
January 1 - Sing decides to leave the partnership. Ahmed agrees to pay Sing $146 000 in a private transaction for his entire share in the business. The result is that all of Sing’s equity will be transferred to Ahmed. The income or loss will now be divided equally (50-50) between Kim and Ahmed. There will be no salary.
December 31 - The business recorded a net loss of $92 000. There were no drawings. Show the entry to allocate the net income to the partners' capital accounts. Prepare a Statement of Partners' Equity for 2019.

a) Prepare the entry to record the departure of Sing.

b) Record the entry to allocate the net income to the partners' capital accounts.

c) Prepare a Statement of Partners' Equity for 2019.

2020
January 1 – The partners decide to liquidate the partnership. They have the following balances:
Cash $59,834
Accounts Receivable $9,000
Equipment $ 220,000
Accumulated Depreciation $ 50,000
Accounts Payable $ 8,834
The partners were able to collect $7,000 of the accounts receivable and sell the equipment for $144 000.

a) Record all journal entries to dissolve the partnership.

When completing this liquidation, if your balance sheet does not balance because your capital balances are different, then adjust the cash figure to an amount that would allow the balance sheet to balance before you start the liquidation process.

Answer rating: 100% (QA)

solution The answer is as follows In a accounting for partnership the new partner contributes capital by bringing cash or any asset The contributed as... View the full answer