Bob Spade and Ken Lundy have formed the partnership Art World, and have capital balances of...
Bob Spade and Ken Lundy have formed the partnership Art World, and have capital balances of $ 120,000 and $ 105,000, respectively on January 1, 2021. On June 1, 2021, Lundy invested an additional $ 20,000. Also, during the year, Spade withdrew $ 16,000 and Lundy withdrew $ 22,000. Sales for the year amounted to $ 850,000 and expenses were $ 520,000. After taking salary allowances of $ 60,000 and $ 90,000, respectively, Spade and Lundy share any remaining profit and losses on a 40% and 60% ratio, respectively.
Instructions
a) Prepare a schedule that shows the division of profit to each partner.
b) Prepare the closing entries at December 31, 2021, for the Art World partnership.
c) Prepare a statement of partners' equity for 2021.
Homework Answers
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Bob Spade and Ken Lundy have formed the partnership Art World,
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