Conway and Lawrence form a partnership by combining the assets and liabilities of their respective sole proprietorships. The following are the assets and liabilities of each partner and their market values.
Conway
[Assets]--------------------- [Book Value]--------------[Market Value]
Cash________________20,000____________... 0
Accounts Receivable____5,000 _____________3,000
Notes Payable__________10,000 ______________ 0
Inventory ______________25,000 ___________28,000
Lawrence
[Assets]------------------[Book Value]---------------[Market Value]
Cash_______________10,000_____________...
Equipment___________50,000____________...
Accumulated Deprec.__15,000_______________0
Accounts payable______7,000_______________0
1) Journalize formation of partnership
Accounts________Debit_______ Credit
(8 rows)
*Halfway thru the 1st year of operations Conway & lawrence admit Korman to the partnership & Korman buys a 1/2 share for $37,000 in cash
2)Journalize Korman;s Admission to the partnership
Accounts_________Debit________Credit
(2 rows)
*The net income for the first year of operations was $50,000. After giving Conway a salary of 20,000 the rest of the net income is split evenly among the partners
3) Prepare an income distribution worksheet
_____Net income ______50,000
Conway_____Korman_____Lawrence
(3 rows)
4) Journalize the closing of the income summary accounts to the capital accounts
Accounts_______Debit________Credit