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Concept explainers
Amit, Babu and Charu set up a partnership firm on April 1, 2015. They
contributed Rs. 50,000, Rs. 40,000 and Rs. 30,000, respectively as their
capitals and agreed to share profits and losses in the ratio of 3 : 2 :1. Amit is to be paid a salary of Rs. 1,000 per month and Babu, a Commission of Rs. 5,000.It is also provided that interest to be allowed on capital at 6% p.a. The drawings for the year were Amit Rs. 6,000, Babu Rs. 4,000 and Charu Rs. 2,000. Interest on drawings of Rs. 270 was charged on Amit’s drawings, Rs. 180 on Babu’s drawings and Rs. 90, on Charu’s drawings. The net profit as per
the partners.
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- 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…arrow_forwardSteve and Heather decided to form a partnership on April 1. Steve invested $60,000 and Heather invested $40,000. Net income for the fiscal year ended March 31 was $110,000. Each partner is to receive 10% on their original investment. Steve and Heather are to receive a salary allowance of $35,000 and $45,000, respectively. The remainder is to be divided as follows: 70% to Steve and 30% to Heather. Determine the amount of net income that Steve and Heather would have received.arrow_forwardprepare the journal entry to record the investment of both partner in the partnershiparrow_forward
- Ahmed and Salim form a partnership on June 1. Ahmed contributes OMR 15,000 cash, inventory with a market value of OMR 40,000 , and Accounts Payable of OMR 80,000. Ahmed also contributed computer equipment with a cost of OMR 80,000 and accumulated depreciation of OMR 20,000 . Current market value is OMR 85,000 Ahmed's Capital will be Select one: O a. Credit, 30,000 O b. Credit, 60,000 O c. Debit, 30,000 O d. Debit, 60,000arrow_forwardCan you make a solution for these? The right answer for Rod and Sol is 420,000. Thanks!arrow_forwardDewwy, Screwum, and Howe are forming a partnership. Dewwy is transferring $93,000 of personal cash to the partnership. Screwum owns land worth $27,000 and a small building worth $205,000, which she transfers to the partnership. Howe transfers to the partnership cash of $19,000, accounts receivable of $47,700 and equipment worth $35,000. The partnership expects to collect $45,000 of the accounts receivable. Cash 93000 Dewwy Capital 93000 Equipment 27000 Building 205000 Screwum Capital 232000 Cash 19000 Accounts Recievable 47700 Equipment 35000 Doubtful 2700 Howe Capital 99000 What amount would be reported as total owners’ equity immediately after the investments? I would have expected $99,000 since this was agreed upon. What did I miss in the reading?arrow_forward
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