On February 1, 2023, Tessa Williams and Audrey Xie formed a partnership in Ontario. Williams contributed $85,000 cash and Xie contributed land valued at $125,000 and a small building valued at $185,000. Also, the partnership assumed responsibility for Xie's $135,000 long-term note payable associated with the land and building. The partners agreed to share profit or loss as follows: Williams is to receive an annual salary allowance of $95,000, both are to receive an annual interest allowance of 15% of their original capital investments, and any remaining profit or loss is to be shared equally. On November 20, 2023, Williams withdrew cash of $65,000 and Xie withdrew $50,000. After the adjusting entries and the closing entries to the revenue and expense accounts, the Income Summary account had a credit balance of $165,000. Required: 1. Present general journal entries to record the initial capital investments of the partners, their cash withdrawals, and the December 31 closing of the Income Summary and withdrawals accounts.
On February 1, 2023, Tessa Williams and Audrey Xie formed a partnership in Ontario. Williams contributed $85,000 cash and Xie contributed land valued at $125,000 and a small building valued at $185,000. Also, the partnership assumed responsibility for Xie's $135,000 long-term note payable associated with the land and building. The partners agreed to share profit or loss as follows: Williams is to receive an annual salary allowance of $95,000, both are to receive an annual interest allowance of 15% of their original capital investments, and any remaining profit or loss is to be shared equally. On November 20, 2023, Williams withdrew cash of $65,000 and Xie withdrew $50,000. After the adjusting entries and the closing entries to the revenue and expense accounts, the Income Summary account had a credit balance of $165,000. Required: 1. Present general journal entries to record the initial capital investments of the partners, their cash withdrawals, and the December 31 closing of the Income Summary and withdrawals accounts.
Chapter21: Partnerships
Section: Chapter Questions
Problem 2BCRQ
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Transcribed Image Text:On February 1, 2023, Tessa Williams and Audrey Xie formed a partnership in Ontario. Williams contributed $85,000 cash and Xie
contributed land valued at $125,000 and a small building valued at $185,000. Also, the partnership assumed responsibility for Xie's
$135,000 long-term note payable associated with the land and building. The partners agreed to share profit or loss as follows: Williams
is to receive an annual salary allowance of $95,000, both are to receive an annual interest allowance of 15% of their original capital
investments, and any remaining profit or loss is to be shared equally. On November 20, 2023, Williams withdrew cash of $65,000 and
Xie withdrew $50,000. After the adjusting entries and the closing entries to the revenue and expense accounts, the Income Summary
account had a credit balance of $165,000.
Required:
1. Present general journal entries to record the initial capital investments of the partners, their cash withdrawals, and the December 31
closing of the Income Summary and withdrawals accounts.
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