On March 1, 2017, Eckert and Kelley formed a partnership. Eckert contributed $80,000 cash and Kelley contributed land valued at $64,000 and a building valued at $94,000. The partnership also assumed responsibility for Kelley’s $70,000 long-term note payable associated with the land and building. The partners agreed to share income as follows: Eckert is to receive an annual salary allowance of $31,500, both are to receive an annual interest allowance of 12% of their beginning-year capital investment, and any remaining income or loss is to be shared equally. On October 20, 2017, Eckert withdrew $30,000 cash and Kelley withdrew $23,000 cash. After the adjusting and closing entries are made to the revenue and expense accounts at December 31, 2017, the Income Summary account had a credit balance of $76,000.

Required:
1a. & 1b. Prepare journal entries to record the partners' initial investments and their subsequent cash withdrawals.
1c. Determine the partners' shares of income, and then prepare journal entries to close Income Summary and the partners' Withdrawals accounts.
2. Determine the balances of the partners’ capital accounts as of December 31, 2017.

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Prepare journal entries to record the partners' initial capital investments and their subsequent cash withdrawals.

Journal entry worksheet

Record the partners' initial capital investment.

Note: Enter debits before credits.

Date	General Journal	Debit	Credit
Oct 20, 2017

Record the cash withdrawal of Eckert ($30,000) and Kelley ($23,000).

Date	General Journal	Debit	Credit
Mar 01, 2017

Determine the partners’ shares of income, and then prepare journal entries to close Income Summary and the partners' Withdrawals accounts. (Enter all values as positive amounts.)

	Allocation of Partnership Income
		Eckert	Kelley	Total
	Net Income
	Salary allowances			0
	Balance of income
	Interest allowances			0
	Balance of income
	Balance allocated equally			0
	Balance of income			$0
	Shares of the partners	$0	$0
Date	General Journal	Debit	Credit
Record the entry to close the partners' withdrawals accounts.
Dec 31, 2017
Record the entry to close the income summary account.
Dec 31, 2017

Determine the balances of the partners' capital accounts as of December 31, 2017.

Capital Account Balances	Eckert	Kelley
Initial investment
Withdrawals
Share of income
Ending balances	$0	$0

Answer rating: 100% (QA)

Answer 1a 1b Journal Entry Date 1Mar17 Cash Land Answer 10 Particulars Building Long term Notes Paya... View the full answer