Question

1.)

Betty and Crocker start a partnership together.

Betty contributes cash of $10,000; and equipment of $2,000 to start the partnership

Crocker contributes cash of $18,000; and inventory of $5,000, plus a note payable of $2,500

Make the necessary journal entries to show the partnership receiving both partners contributions. Go with two separate journal entries.

2.)  

Betty Crocker partnership made $75,000 for their first year.

Betty will receive a $10,000 salary for the year, while Crocker will receive no salary.

Both partners will receive 7% of their start of the year capital balances (use the capital you credited for each partner in question 1)

The remaining net income is split evenly.

Make the journal entry showing each partner receiving their share of the net income.

Answer 1

1)

Date	Account title	Debit	credit
a	Cash	10000
	Equipment	2000
	Betty's capital		12000
b	cash	18000
	Inventory	5000
	Note payable		2500
	Corcker 's capital		20500

2)

	Betty	Crocker	Total
salary	10000	0	10000
Interest on capital	12000*7%= 840	20500*7%= 1435	2275
Remaining profit (75000-10000-2275 = 62725)	31362.5	31362.5	62725
Total	42202.5	32797.5	75000

Date	Account title	Debit	credit
	Income summary	75000
	Betty's capital		42202.5
	Crocker's capital		32797.5