value: 5.00 points Groucho, Harpo, and Chico go into partnership on January 1, 2

Question

value: 5.00 points Groucho, Harpo, and Chico go into partnership on January 1, 2015. Groucho contributes $105,000, Harpo $105,000, and Chico $140,000 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 $4,500 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.) (1) The initial investment. (i) The monthly distribution amounts for each of the three partners (ii) The allocation of an annual net income of $126,000. For purposes of this journal entry, assume sales were $189,000 and that all expenses (totaling $63,000) were recorded in a single account called (iv) The closing of the drawings accounts at the end of the year View transaction list ·View journal entry worksheet No Transaction General Journal Debit Credit Cash 350,000 Groucho Capital Harpo Capital Chico Capital 105,000 105,000 140,000 Groucho Drawings Harpo Drawings Chico Drawings Cash 4,500 Sales Groucho Capital Harpo Capital Chico Capital Operating Expenses

Explanation / Answer

2)

a) Date Accounts Debit Credit 1) Cash 350000 Groucho Capital 105000 Harpo Capital 105000 Chico Capital 140000 2) Groucho's Drawings 4500 Harpo's Drawings 4500 Chico's Drawings 6000 15000 Partner's proportion of capital Groucho Capital 105000 30% Harpo Capital 105000 30% Chico Capital 140000 40% 350000 If Groucho receives 30% of the drawings dispersed, which equals $4500, then the total drawings dispersed is $15,000 ($4500/.30). Harpo receives $4500 ($15,000 x 0.30) and Chico receives $6000 ($15000 x 0.4) 3) Sales 189000 Groucho Capital (126000*30%) 37800 Harpo Capital (126000*30%) 37800 Chico Capital (126000*40%) 50400 Operating Expenses 63000 4) Multiply the monthly income dispersals by 12 for the balance in the drawings accounts at the end of the year but before closing. Groucho Capital 54000 Harpo Capital 54000 Chico Capital 72000 Groucho Capital 54000 Harpo Capital 54000 Chico Capital 72000 Groucho's Drawings 4500 12 54000 Harpo's Drawings 4500 12 54000 Chico's Drawings 6000 12 72000

Related Questions

Navigate

• Browse (All)
• Browse V
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.