Surj Uppal and Parvinder Atwal began a new business on February 14, when each invested $157,500 in the company. On December 20, it was decided that $61,400 of the company’s cash would be distributed equally between the owners. Two cheques for $30,700 were prepared and given to the owners on December 23. On December 31, the company reported a $122,800 profit.

Required:
Prepare two sets of journal entries to record the investments by the owners, the distribution of cash to the owners, the closing of the Income Summary account, and the withdrawals or dividends under these alternative assumptions:

a. The business is a partnership.

• Record the investment into business by partners.
• Record the distribution of cash to the owners.
• Record the closing of the Income Summary account.
• Record the closing of withdrawals.
  
  b. The business is a corporation that issued 1,000 common shares. Cash dividend account is used for declaring dividends.
• Record the issuance of common shares.
• Record the declaration of dividends.
• Record the payment of dividends.
• Record to close the income summary account.
• Record to close the dividends accounts.

Answer rating: 100% (QA)

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