Exercise D-6 Journalizing partnership transactions LO P2 On March 1, 2015, Ecker

Question

Exercise D-6 Journalizing partnership transactions LO P2 On March 1, 2015, Eckert and Kelley formed a partnership.Eckert contributed $94,000 cash and Kelley contributed land valued at $75,200 and a building valued at $105,200. The partnership also assumed responsibility for Kelley's $84,000 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 9% of their beginning-year capital investment, and any remaining income or loss is to be shared equally. On October 20, 2015, Eckert withdrew $31,000 cash and Kelley withdrew $24,000 cash. After the adjusting and closing entries are made to the revenue and expense accounts at December 31, 2015, the Income Summary account had a credit balance of $95,000 1a&b.Prepare; jounal entries to record the partners' initial investments and their subsequent cash withdrawals. View transaction list Journal entry worksheet Record the partners' initial capital investment Note: Enter debits before credits. Date General Journal Debit Credit Mar 01, 2015

Explanation / Answer

a Explanation Debit Credit May 1 2015 Cash 94000 Land 75200 Building 105200 Long term note payable 84000 Eckert Capital 94000 Kelley Capital 105200+75200-84000 96400 Allocation of partnership Income Eckert Kelley Total Net Income 95000 Balance Of allowances 28500 0 28500 Balance of income 66500 Interest allowances 8460 8676 17136 Balance of income 49364 Balance allocated equially 24682 24682 49364 Balance of income 0 Shares of partners 61642 33358 31/12/2015 Eckert Capital 31000 Kelley Capital 24000 Eckert Withdwral 31000 Kelley Withdwral 24000 31/12/2015 Income Summary 95000 Eckert Capital 61642 Kelley Capital 33358 2 Capital Account Balances Eckert Kelley Initial Investment 94000 96400 Withdwrals -31000 -24000 Share of incomme 61642 33358 Ending Balances 124642 105758

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