Award: 0.67 out of 1.00 point Problem 11-248 [LO S1] Groucho, Harpo, and Chico g

Question

Award: 0.67 out of 1.00 point Problem 11-248 [LO S1] Groucho, Harpo, and Chico go into partnership on January 1, 2015. Groucho contributes $360,000, Harpo $280,000, and Chico $160,000 to a business called Marx Brothers' Partnership. On a monthly basis, each partner is allocated income and is allowed to receive cash from the business in proportion to the capital they provided. Assume that Groucho receives $7,200 cash per month. Required: a-d. Prepare the journal entry for the following transactions: (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) () The initial investment (i) The monthly distribution amounts for each of the three partners (ili) The allocation of an annual net income of $336,000. For purposes of this journal entry, assume sales were $504,000 and that all expenses (totaling $168,000) were recorded in a single account called operating expenses (v) The closing of the drawings accounts at the end of the year. Answer is not complete. No Transaction General Journal Debit Cash 800.0 Groucho Capital Harpo Capital Chico Capital 2 Groucho Drawings Harpo Drawings Chico Drawings 7,20 5,600 3,200 Cash

Explanation / Answer

JOURNAL

Date

General Journal

Debit

Credit

3

Revenue

504000

      Groucho Capital

151200

      Harpo Capital

117600

      Chico Capital

67200

       Operating expense

168000

4

Groucho Capital

86400

Harpo Capital

67200

Chico Capital

38400

      Groucho Drawings

86400

      Harpo Drawings

67200

      Chico Drawings

38400

MARX Brother's Partnership

Statement of Partner's Equity

For the year Ending December 31, 2015

Groucho

Harpo

Chico

Investments, January 1, 2015

360000

280000

160000

Add: Net Income

151200

117600

67200

Totals

511200

397600

227200

Less: Drawings

86400

67200

38400

Partner's equity, December 31, 2015

424800

330400

188800

JOURNAL

Date

General Journal

Debit

Credit

3

Revenue

504000

      Groucho Capital

151200

      Harpo Capital

117600

      Chico Capital

67200

       Operating expense

168000

4

Groucho Capital

86400

Harpo Capital

67200

Chico Capital

38400

      Groucho Drawings

86400

      Harpo Drawings

67200

      Chico Drawings

38400

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