Account for partner investments, allocating profits and losses to the partners, accounting for withdrawal of a partner [30-40 min]
This problem is related to the Draper Consulting situation started in Chapter 1.
Colin Draper, Dave Tau, and Sandi Williams decide to form a graphic design partnership. Colin figures this graphic design business will help his other company, Draper Consulting, with any graphic design needs. Additionally, Dave and Sandi have connections with many companies and can expand and grow this new partnership. Each of the three partners contributes $10,000 cash to start up the CDS partnership. They agree to share profits in two steps. First, Tau will receive $10,000 and Williams will receive $15,000 since they will do most of the graphic design work. Any remaining profits or losses will be shared 1:2:3. The business' starts on January 1, 2012. On December 31, 2012, the business posted a loss of $8,000. Draper decides to withdraw from the partnership on December 31, 2012. Tau and Williams agree to give Draper $3,000 for his equity interest.
Requirements
1. Journalize the investment of the partners in the partnership on January 1, 2012.
2. Journalize the allocation of the loss from the Income summary account.
3. Journalize the withdrawal of Draper as a partner on December 31, 2012.
4. Calculate the ending balances in Tau and Williams's capital accounts.
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