Question

part 2 only

Required 1. Prepare journal entries for the following dates: a. July 1, 2019 b. June 20, 2020 c. June 30, 2020 d. July 1, 2020 2. Calculate the balance in each partner's capital account immediately after the July 1, 2020, entry. Help Me SOLVE IT Problem 11-6B Partnership entries, profit allocation, withdrawal of a partner LO2, 3, 4 CHECK FIGURES: 1a. Cr. Harris: $56.000: 1b. Cr. Davis: $110.600:1c. Cr. Harris: $157,500 On November 1, 2020, Harris, Davis, and Tallis formed Restore, a home renovation business, by contributing $56,000 in cash, $91,000 of equipment, and a truck worth $42,000, respectively. The partners agreed to share profits and losses as follows: Davis and Tallis were to receive an annual salary allowance of $196,000 each and any remaining profit or loss was to be shared 5:2:3. On October 31, 2021, the partnership's first year-end, the Income Summary account had a debit balance of $35,000. On November 1, 2021, Harris withdrew from the partnership and received $7,000 from the partnership. Required 1. Prepare journal entries for the following dates: a. November 1, 2020 b. October 31, 2021 c. November 1, 2021 2. Calculate the balance in each partner's capital account immediately after the November 1, 2021, entry Problem 11-7B Withdrawal of a partner L04 Sr. Burke, Capital: $17,600

Answer 1

1:-

a.

2020
Nov. 1	Cash................................................................................................	56,000
	Equipment.......................................................................................	91,000
	Truck...............................................................................................	42,000
	Harris, Capital.................................................................................		56,000
	Davis, Capital..................................................................................		91,000
	Tallis, Capital...................................................................................		42,000
	To record formation of partnership.

b.

2021
Oct. 31	Harris, Capital....................................................................	213,500
	Davis, Capital.....................................................................		110,600
	Tallis, Capital......................................................................		67,900
	Income Summary....................................................		35,000
	To record closing of loss to capital.

Supporting calculations:
	Harris	Davis	Tallis	Total
Loss...........................................................................				$ (35,000)
Salary allowance:
Harris.........................................................................	$ -0-
Davis.........................................................................		$196,000
Tallis..........................................................................			$196,000
Total salaries...........................................................				(392,000)
Balance of lossto be allocated................................				$(427,000)
Balance allocated 5:2:3:
Harris−(5/10 × $427,000)..........................................	(213,500)
Davis−(2/10 × $427,000)..........................................		(85,400)
Tallis−(3/10 × $427,000)...........................................			(128,100)
Total allocated 5:2:3................................................				427,000
Balance of loss........................................................				$ -0-
Shares of the partners.............................................	$(213,500)	$110,600	$67,900	$(35,000)

c.

2021
Nov. 1	Davis, Capital........................................................................	65,800
	Tallis, Capital.........................................................................	98,700
	Cash............................................................................		7,000
	Harris, Capital.......................................................................		157,500
	To record withdrawal of Harris.

Harris, Capital 56,000 213,500 157,500

Supporting calculations:

Harris, Capital = $56,000 - $213,500 = $(157,500) OR Harris, Capital 56,000 213,500 157.500

$157,500 + $7,000 = $164,500 loss to allocate to remaining partners

$164,500 × 2/5 = $65,800 absorbed by Davis

$164,500 × 3/5 = $98,700 absorbed by Tallis

2:-

Harris, Capital 56,000 Nov 1/20 213,500 157,500 Nov 1/21 0 Balance Davis, Capital 91,000 Nov 1/20 65,800 110,600 Oct 31/21 135,800 Balance Oct 31/21 Nov 1/21 Tallis, Capital 42,000 Nov 1/20 98,700 67,900 Oct 31/21 11,200 Balance Nov 1/21