Question

On March 2, 2020, Zoe Moreau, Karen Krneta, and Veronica Visentin start a partnership to operate a personal coaching and lifestyle consulting practice for professional women. Zoe will focus on work-life balance issues, Karen on matters of style, and Veronica on health and fitness. They sign a partnership agreement to split profits in a 3:2:3 ratio for Zoe, Karen, and Veronica, respectively. The following are the transactions for MKV Personal Coaching: 2020 Mar. 2 The partners contribute assets to the partnership at the following agreed amounts: Z. Moreau $15,000 K. Krneta $10,000 17,000 V. Visentin $20,000 Cash Furniture Equipment Total 18,000 13,000 $33,000 $33,000 $27,000 They also agree that the partnership will assume responsibility for Karen's note payable of $5,000. Dec. 20 Zoe, Karen, and Veronica each withdraw $30,000 cash as a "year-end bonus." No other withdrawals were made during the year. 31 Total profit for 2020 was $110,000. 2021 Jan.5 Zoe and Veronica approve Karen's request to withdraw from the partnership for personal reasons. They agree to pay Karen $15,000 cash from the partnership. 6 Zoe and Veronica agree to change their profit-sharing ratio to 4:5, respectively. Dec. 20 Zoe and Veronica withdraw $42,750 and $45,000 cash, respectively, from the partnership. 31 Total profit for 2021 was $123,750. 2022 Jan. 4 Zoe and Veronica agree to admit Dela Hirjikaka to the partnership. Dela will focus on providing training in organizational skills to clients. Dela invests $31,000 cash for 25% ownership of the partnership.

Answer 1

Date	Account titles and explanation	Debit	Credit
2021
Jan. 5	K. Krneta, Capital	19500
	Z. Moreau, Capital		2250
	V. Visentin, Capital		2250
	Cash		15000
	(To record withdrawal of partner)
Dec. 20	Z. Moreau, Drawings	42750
	V. Visentin, Drawings	45000
	Cash		87750
Dec. 31	Income Summary	123750
	Z. Moreau, Capital ($123,750 × 4/9)		55000
	V. Visentin, Capital ($123,750 × 5/9)		67850
2022
Jan. 4	Cash	31000
	Z. Moreau, Capital (4/9 × $9,000)	4000
	V. Visentin, Capital (5/9 × $9,000)	5000
	D. Hirjikaka, Capital		40000

Capital Balances December 31, 2020
	Z. Moreau	K. Krneta	V. Visentin	Total
Investments	33000	22000	33000	88000
Drawings	-30000	-30000	-30000	-90000
Profit	41250	27500	41250	110000
Ending Balance	44250	19500	44250	108000

Capital balance of withdrawing partner (22000-30000+27500)	19500
Payment to withdrawing partner	15000
Bonus to remaining partners	4500
Allocation of bonus:
Z. Moreau, Capital ($4,500 × 3/6)	2250
V. Visentin, Capital ($4,500 × 3/6)	2250

	Z. Moreau	V. Visentin	Total
Beginning balance	44250	44250	88500
Bonus	2250	2250	4500
Drawings	-42750	-45000	-87750
Profit	55000	68750	123750
Ending Balance	58750	70250	129000

Total capital of existing partnership	129000
Investment by new partner, D. Hirjikaka	31000
Total capital of new partnership	160000
D. Hirjikaka capital credit (25% × $160,000)	40000
Investment by new partner, D. Hirjikaka	31000
D. Hirjikaka capital credit	40000
Bonus to new partner	9000

Part B

MKV PERSONAL COACHING Balance Sheet (partial) January 4, 2022
Partners’ equity
D. Hirjikaka, Capital	40000
Z. Moreau, Capital (58750-4000)	54750
V. Visentin, Capital (70250-5000)	65250
Total partners' equity		$160000