Journalize partnership transactions/ Income allocations

Kelley and Eckert formed a partnership, Eckert invested $82,500 in cash and Kelley invested land valued at $60,000 and a bldg valued at $100,000. The partnership also assumed responsibility of Kelley's $92,500 long-term note payable associated w/the land and bldg. They agreed to share income, Eckert to receive and annyal salary allowance of $25,000, both receive an annual interest allowance of 10% of their beginning year capital investment, any remaining income or loss to be shared equally. On 20 Oct Eckert withdrew $34,000 cash and Kelley withdrew $20,000 cash. Afer the adjusting and closing entries are made to the revenue and expense accounts at 31 Dec, the Income Summary account had a credit balance of $90,000.

Prepare journal entries to record 1)the partners initial capital investments, b) their cash withdrawals, and c) the 31 Dec closing of both the withdrawls and Income Summary accounts.

and determine the balances of the partners' capital accounts as of 31 Dec 08.

Kramer and Knox began a partnership by investing $60,000 and $80,000 respectively. The first year the partnership earned $160,000. Prepare calculations showing how the $160,000 income should be allocated to the partners under each of the following three seperate plans for sharing income and loss.

(1) the partners failed to agree on a method to share income (2) the partners agreed to share income and loss in proportion to their initial investments (round to nearest dollar) (3) the partners agreed toshare income by granting a $50,000 per year salary to Kramer and a $40,000 salary to Knox, 10% interest on their initial capital investments, and the remaining balance shared equally.

Solution Summary

The solution explains how to journalize partnership transactions and prepare the income allocation