Module 5 Assignment: Conway and Lawrence form a partnership by combining the assets and liabilities of their respective sole proprietorships. The following are the assets and liabilities of each partner and their market values. Conway Lawrence Asset Book value Market value Asset Book Value Market value Cash $20,000 Cash $10,000 Accounts receivable $5,000 $3,000 Equipmnet $50,000 $30,000 Note payable $10,000 Accumulated Depreciation $15,000 Inventory $25,000 $28,000 Accounts Payable $7,000 Requirements: 1 Journalize the formation of the partnership. Journal Accounts Debit Credit Half way through the first year of operations Conway and Lawrence admit Korman to the partnership. Korman buys a 1/2 share for $37,000 in cash. 2 Journalize Korman's admission to the partnership. Journal Accounts Debit Credit The net income for the first year of oprations was $50,000. After giving Conway a salary of $20,000, the rest of the net income is split evenly among the partners. 3 Prepare an income distribution worksheet. Income Distribution Net Income $50,000 Conway Korman Lawrence 4 Journalize the closing of the income summary accounts to the capital accounts. Journal Accounts Debit Credit After 5 years of operation Conway, Korma, and Lawrence decide to dissolve their partnership. The following are the account balances before liquidation begins: Cash 127,000 The equipment is sold for $8,000 Equipment 20,000 Note Payable 6,000 Capital, Conway 65,000 Capital,Korman 40,000 Capital, Lawrence 36,000 5 Complete the liquidating worksheet. Liquidation Cash Equipment Note payable Conway Korman Lawrence 6 Journalize each step of the closing. Journal Accounts Debit Credit