Exercise 12-7 Journalizing partnership transactions LO P2

On March 1, 2017, Eckert and Kelley formed a partnership. Eckert contributed $96,000 cash and Kelley contributed land valued at $76,800 and a building valued at $106,800. The partnership also assumed responsibility for Kelleys $86,000 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 $28,500, both are to receive an annual interest allowance of 11% of their beginning-year capital investment, and any remaining income or loss is to be shared equally. On October 20, 2017, Eckert withdrew $28,000 cash and Kelley withdrew $21,000 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 $93,000. 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.

Reg 2 Req 1A and 1B Req 10 Prepare journal entries to record the partners' initial capital investments and their subsequent cash withdrawals. View transaction list Journal entry worksheet 2 Record the partners' initial capital investment. Note: Enter debits before credits. Date General Journal Debit Credit Mar 01, 2017 Reg 2 Req 1A and 1B Req 10 Prepare journal entries to record the partners' initial capital investments and their subsequent cash withdrawals. View transaction list Journal entry worksheet 2 Record the cash withdrawal of Eckert ($28,000) and Kelley ($21,000). Note: Enter debits before credits. Date General Journal Debit Credit Oct 20, 2017 Req 10 Reg 2 Reg 1A and 1B 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 Kelley Eckert Total Net Income Salary allowances Balance of income Interest allowances Balance of income Balance allocated equally Balance of income Shares of the partners 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 Req 10 Req 2 Req 1A and 1B Determine the balances of the partners' capital accounts as of December 31, 2017. Capital Account Balances Kelley Eckert Initial investment Withdrawals Share of income Ending balances