Question

Partnership A, B, and C is a law firm. You have been engaged as accountant to prepare financial statements for the year ended December 31, 2019.

Part A (2019)

Partnership A, B, and C is a law firm. You have been engaged as accountant to prepare financial statements for the year ended December 31,2019 .

The partnership's trial balance is shown on the "2019 Tr. Bal." page (see tab below). 'Salary expenses' listed on the trial balance are each partners' withdrawals for the year.

Partnership profits are allocated based first on salaries, then on interest on opening capital balances, then on a fixed ratio.

Required

1 Prepare year-end adjusting entries. No descriptions are necessary.

2 Allocate partnership profit or loss to each partner. Prepare the necessary adjusting entry.

3 Post the adjusting entries and complete the trial balance.

4 Prepare an income statement and statement of partners' capital for the year ended December 2019 and a balance sheet at December 31 .

Part B (2020)

a. On December 31,2020 new partner D invests other assets into the partnership for a one-quarter ownership interest. An equal amount of capital is contributed by A, B, and C to make up the difference. At December 31,2020 , the partners' capital balances are as follows:

b.

Immediately after this, partner C withdraws from the partnership. She is paid in cash the balance in her capital account plus a bonus, contributed equally from the capital balances of A, B, and D. Bonus paid to C   $18,000

Required

5 Prepare necessary adjusting entries at December 31, 2020 to record the admission of partner D and the withdrawal of partner C. Show all calculations.

Part C (2021 and 2022)

The trial balance of A,B, and D at December 31,2021 after all adjustments have been made is as follows:

Required

6 Print out the "Part. Liqu." page (see tab below). Complete the schedule. Assume any partner deficiency (debit balance) is repaid with cash by the applicable partner.

7 Prepare the journal entries to record the liquidation.

Answer 1

Answer-1	Year end Adjusting entries
		Debit	Credit
	Salary A/c
	Partner -A	$        100,000
	Partner -B	$        100,000
	Partner -C	$        160,000
	Interest On capital A/c
	Partner -A	$             3,500
	Partner -B	$             3,000
	Partner -C	$             3,500
	Profit and Loss Adjustment A/C		$     370,000
Answer-1	Year end Adjusting entries
		Debit	Credit
	Salary A/c
	Partner -A	$        100,000
	Partner -B	$        100,000
	Partner -C	$        160,000
	Interest On capital A/c
	Partner -A	$             3,500
	Partner -B	$             3,000
	Partner -C	$             3,500
	Profit and Loss Adjustment A/C		$     370,000

Answer-2	Allocating profit or loss to each Partners on the basis of Fixed Ratio
	Fixed Ratio
	Partner -A	2
	Partner -B	3
	Partner -C	5
	Adjusting Entries
		Debit	Credit
	Profit and Loss Adjustment A/C	$        370,000
	Partner -A      A/c		$    74,000.0
	Partner -B      A/c		$ 111,000.0
	Partner -C      A/c		$ 185,000.0

Answer-3	Trial Balance	Debit	Credit
	Salary A/c	$        360,000
	Interest On capital A/c	$          10,000
	Loss on partners Capital		$     370,000

Answer-4	Income Statement
	Salary A/c	$        360,000
	Interest On capital A/c	$          10,000
	Profit and Loss Adjustment A/c		$     370,000
	Statement of Partners Capital
		Partner
		A	B	C
	Opening Capital	$          70,000	$        60,000	$          70,000
	ADD:Interest on Capital	$             3,500	$          3,000	$             3,500
	Less:Profit And Loss Adjustment	$          74,000	$     111,000	$        185,000
	Partners Closing Balance	$              (500)	$     (48,000)	$      (111,500)
	Balance Sheet as At December 31, 2019
	Partners Capital Ac
	Partner -A	$          70,000
	Partner -B	$          60,000
	Partner -C	$          70,000
	Interest On capital	$          10,000	$     210,000

Answer 2

$ 30,000,00 $70,009,00 80000002 Ansur; - Given Data Adsucced Trail Balance po unadjust adjusting unodtugt adsuiting Account title Debil..credit Debit. credit debet Credit Debil credit cash. $ 70.000,00 $70,000,00 Laccount Recevible -$30,000.00 Accounts payble Acarithe 3190oCoco : $ 103,50900 3 110,cet, 603103,500,000 $293,500,000 A with drawls $110gcoço $11000000 $10300000 $ 11 000000 B. capital $10300000's 10COoooo $ 283,000.00 B. with draws $1,000000 $1,000CCCO L c. capital . .15 1,6300000 $ 16OCUOCO $313,50000 C. withdraws $1600ccco income summary $ 550,000,00 Free Revencel Loom JUOOOOOO - Office Expense jogooroo $ 110.000 $100.000 Baleries Expenge-A Model 100000 311900200 $10qaooo $roottines i colido Salvies Expense-B.18000 131, Opowoof,000000 1600000) $16000 $1 600.000 $ 1,50,000og. 3550000 000 ODOL cs Scanned with Can Scanner

Answer! P2 16000000 Salaries Eileence-B Intext on opening cap-A Intert on opening cap-B Intent on opening cap-c $16cccco B160000 150000 1600st de boter 00 00 00 00 $3,50000 $3509001 $3,800.00 $300000 000,00 33,00.000 $350OCO $350900 $35090 pro 37,400.00 $ 700 slycooos) 51000 31510, 001'o' oit 00 T o 10.00 0000 140, [00000 L A Bond. Income statement ! for Year ended December 3, 2019 Free Revenue 15,50,000.00 bey ofbe espent 4,00,000,00 Gross Income 1,50,000.00 UN Scanned with CamScanner

Answsin Page 3 statement of Profits ABC AB. I cl Total Cap $70,00900$ 6000000 $ 70,000,00 opening Filed 9.00 3.00 5.00 1 10.10. Satio Gross 1,50,000,00 Income Salony 1,00,000.00},00,000.00 $1,60.000,00 $360,000,00 Intenton € 133,300,00 $3,00000 $3,500,00 $ 19000,00. lopcal Netlos 9,20,000,00 sherof 44 000,00 66.000,00 110,000,002,20,000,00 leser Scanned with Any CamScanner

Ansur P-84 A. B and C Statement of Parternes. Capitul AIC LAB Balancasangan 01, 2019 270.000,00 $ 60,000,00 € 70,000,00. Additinal capital 1$_120,000,00 $1,20,000,00 $ 86,000,00 less Drawing (.000,002 $1,00,000,00 $ 1,60,000,00 Add Saliviy.. ------ $ 1,00,000,00 $ 1,00,000,00 $ 1,60,000,00. Add intent on or cap | $3,500,00 $3,000,00 $.3500,000. Les Sbere on Losses (44,000,00) 1$ 66,600,00 $ 3,500,00 Beilence as on Dec.31.2018 | 1,39,95900 1*117,000,00 $ 110,000,00 Total capitul. ALC. _ LAB. And c $ 300,000,00 - Balence Sheets at. Dec31.2018. ASS.ets wiabilites cash $ 70,000,00 L capiteil. All 1 $ 300,000,00 accout Rearliable $ 300,000,00 laccaets payble $ 70,000,00 Total Assets $370,000,00 Total liability $ 370, 200,00 CamScanner