LO 15.3The partnership of Magda and Sue shares profits and losses in a 50:50 ratio after Mary receives a $7,000 salary and Sue receives a $6,500 salary. Prepare a schedule showing how the profit and loss should be divided, assuming the profit or loss for the year is:
In addition, show the resulting entries to each partner’s capital account.
LO 15.4The partnership of Arun, Margot, and Tammy has been doing well. Arun wants to retire and move to another state for a once-in-a-lifetime opportunity. The partners’ capital balances prior to Arun’s retirement are $60,000 each. Prepare a schedule showing how Arun’s withdrawal should be divided assuming his buyout is:
In addition, show the resulting entries to the capital accounts of each of the three.
LO 15.5Match each of the following descriptions with the appropriate term related to partnership accounting.
|A. Each and every partner can enter into contracts on behalf of the partnership||i. liquidation|
|B. The business ceases operations.||ii. capital deficiency|
|C. How partners share in income and loss||iii. admission of a new partner|
|D. Adding a new partner by contributing cash||iv. mutual agency|
|E. A partner account with a debit balance||v. income sharing ratio|