Exercise 12-3 Journalizing partnership formation LO P2
Angela Moss and Autumn Barber organize a partnership on January 1. Moss's initial net investment is $87,000, consisting of cash ($17,000), equipment ($84,000), and a note payable reflecting a bank loan for the new business ($14,000). Barber's initial investment is cash of $41,000. These amounts are the values agreed on by both partners.
Prepare journal entries to record (1) Moss’s investment and (2) Barber’s investment.
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Exercise 12-4 Income allocation in a partnership LO P2
[The following information applies to the questions displayed below.]
Kramer and Knox began a partnership by investing $58,000 and $65,000, respectively. During its first year, the partnership earned $160,000. Prepare calculations showing how the $160,000 income should be allocated to the partners under each of the following three separate plans for sharing income and loss:
Exercise 12-4 Part 1
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The partners agreed to share income and loss in proportion to their initial investments. (Do not round intermediate calculations.)
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Exercise 12-4 Part 3
(3) The partners agreed to share income by granting a $56,500 per year salary allowance to Kramer, a $46,500 per year salary allowance to Knox, 12% interest on their initial capital investments, and the remaining balance shared equally. (Enter all allowances as positive values. Enter losses as negative values.)
(3) The partners agreed to share income by granting a $56,500 per year salary allowance to Kramer, a $46,500 per year salary allowance to Knox, 12% interest on their initial capital investments, and the remaining balance shared equally. (Enter all allowances as positive values. Enter losses as negative values.)
