Gorman and Morton form a partnership on May 1, 2019. Gorman contributes cash of $63,000; Morton conveys title to the fol

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Gorman And Morton Form A Partnership On May 1 2019 Gorman Contributes Cash Of 63 000 Morton Conveys Title To The Fol 1 (74.74 KiB) Viewed 16 times

Gorman and Morton form a partnership on May 1, 2019. Gorman contributes cash of $63,000; Morton conveys title to the following properties to the partnership: Equipment Licensing agreements The partners agree to start their partnership with equal capital balances. No goodwill is to be recognized. According to the articles of partnership written by the partners, profits and losses are allocated based on the following formula: • Gorman receives a compensation allowance of $800 per month. All remaining profits and losses are split 30:70 between Gorman and Morton, respectively. • Each partner can make annual cash drawings of $7,000 beginning in 2020. Gorman Morton Steele Net income of $17,500 is earned by the business during 2019. Steele is invited to join the partnership on January 1, 2020. Because of her business reputation and financial expertise, she is given a 40 percent interest for $67,000 cash. The bonus approach is used to record this investment, made directly to the business. The articles of partnership are amended to give Steele a $3,000 compensation allowance per month and an annual cash drawing of $14,000. Remaining profits are now allocated: Gorman Morton Steele Book Value $ 21,500 41,500 10% 50 40 Fair Value $ 41,000 49,000 All drawings are taken by the partners during 2020. At year-end, the partnership reports net income of $110,000. On January 1, 2021, Frank (previously a partnership employee) is admitted into the partnership. Each partner transfers 10 percent to Frank, who makes the following payments directly to the partners: Gorman Morton Steele Frank $ 8,687 8,987 14,276 Once again, the articles of partnership must be amended to allow for the entrance of the new partner. This change entitles Frank to a compensation allowance of $600 per month and an annual drawing of $6,000. Profits and losses are now assigned as follows: 12.0% 40.0 38.0 10.0 For the year of 2021, the partnership earned a profit of $42,300, and each partner withdrew the allowed amount of cash. Prepare schedules that determine the capital balances for the individual partners as of the end of each year 2019 through 2021.
Complete this question by entering your answers in the tabs below. Ending Capital Ending Capital Ending Capital Balance 2019 Balance 2020 Balance 2021 Prepare a schedule that determines the ending capital balance for each partner as of the end of 2019. GORMAN and MORTON Statement of Partners' Capital For the Year Ending December 31, 2019 Gorman Morton Beginning balances Net income allocation > Answer is complete but not entirely correct. Drawings Ending balances Total $ 76,500 $ 76,500 $ 153,000 9,730✔ 0✔ 7,770✔ 0♥ 17,500 0 $ 86,230 $ 84,270 $ 170,500 < Ending Capital Balance 2019 Ending Capital Balance 2020 >
Complete this question by entering your answers in the tabs below. Ending Capital Ending Capital Ending Capital Balance 2019 Balance 2020 Balance 2021 Answer is complete but not entirely correct. Prepare a schedule that determines the ending capital balance for each partner as of the end of 2020. (Amounts to be deducted should be indicated with minus sign.) Beginning balances Steele's contribution Income allocation Drawings Ending balances GORMAN, MORTON and STEELE Statement of Partners' Capital For the Year Ending December 31, 2020 Gorman 86,230✔ $ (8,400) ✔ Morton 84,270 $ (19,600) ✔ 16,500 X 49,500 X (7,000) ✔ (7,000) ✔ (14,000)✔ $ 87,330 $ 107,170 $ 197,500 < Ending Capital Balance 2019 Steele 0 167,500 X 44,000 X Total $ 170,500 139,500 110.000 (28,000) 392,000 Ending Capital Balance 2021
Complete this question by entering your answers in the tabs below. Ending Capital Ending Capital Ending Capital Balance 2019 Balance 2020 Balance 2021 Prepare a schedule that determines the ending capital balance for each partner as of the end of 2021. (Amounts to be deducted should be indicated with minus sign.) Beginning balances Admission of Frank Allocation of net income Drawings Answer is complete but not entirely correct. Ending balances GORMAN, MORTON, STEELE and FRANK Statement of Partners' Capital For the Year Ending December 31, 2021 Gorman Morton Steele 107,170 $ 197,500 (8,987) (14,276) (4,200) 32,010 (7,000) (7,000) 79,983 $ 86,983 < Ending Capital Balance 2020 $ $ 87,330 x $ (8,687) 8,340 $ (14,000) $ 201,234 Frank Total $ 392,000 0 31,950 0 42,300 6,150 (6,000) (34,000) $ 32,100 $ 400,300 Ending Capital Balance 2021 >