Question

P12.13A (LO 2, 3, 4, 5, 6) AP 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: Account for formation of a partnership, allocation of profits, and withdrawal and admission of partners, prepare partial balance sheet. 2020 Mar. 2 The partners contribute assets to the partnership at the following agreed amounts: Z. Moreau K. Krneta V. Visentin Cash $15,000 $10,000 $20,000 Furniture 17,000 Equipment 18.000 13,000 Total $33,000 $27,000 $33,000 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 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 und 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 Instructions a. Record the above transactions. For the profit recognized each year, calculate how it is to be allocated and record the closing of the Income Summary account. b. Prepare the partners' equity section of the balance sheet after Dela is admitted to the partnership. Taking It Further Every time a new partner is admitted to a partnership or a partner withdraws from a partnership, it is necessary to completely close the accounting records of the existing partnership and start new accounting records for the new partnershin. Do vou tee or disseree? Explain.

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Answer 1

Journal entries
Date	Account name	Debit	Credit
Capital investment by partners
02-Mar-20	Cash	15000.00
	Equipment	18000.00
	Zoe Moreau Capital		33,000
Capital investment by partners
02-Mar-20	Cash	10000.00
	Furniture	17000.00
	Notes Payable		5,000
	K Krenta Capital		22000.00
Capital investment by partners
02-Mar-20	Cash	20000.00
	Equipment	13000.00
	V Visneti Capital		33000
Cash drawings by partners
20-Dec-20	Zoe Moreau Drawings	30000.00
	K Krenta Drawings	30000.00
	V Visneti Drawings	30000.00
	Cash		90000.00
To close income summary
31-Dec-20	Income Summary	110000.00
	Zoe Moreau Capital		41250.00
	K Krenta Capital		27500.00
	V Visneti Capital		41250.00
Withdrawal of partner from partnership with payment of 15000 as cash
05-Jan-21	K. Krneta, Capital	19500.00
	Z. Moreau, Capital		2250
	V. Visentin, Capital		2250
	Cash		15000
Cash drawings by partners
20-31-2021	Zoe Moreau Drawings	42750.00
	V Visneti Drawings	45000.00
	Cash		87750.00
To close income summary
31-Dec-21	Income Summary	123750.00
	Zoe Moreau Capital		55000.00
	V Visneti Capital		68750.00
Admissin of new partner
04-Jan-22	Cash	31000.00
	Zoe Moreau Capital	4000
	V Visneti Capital	5000
	Dela Capital		40,000
MKV Personal Coaching
Balance Sheet (Partners Equity)
Partners Equity:
Zoe Moreau Capital	50,250
V Visneti Capital	60,750
Dela Capital	40,000
Total Partners Equity		151000.00