sharp and townson had capital balances of 60,000 and 120,000 respectively on jan
ID: 2349098 • Letter: S
Question
sharp and townson had capital balances of 60,000 and 120,000 respectively on january 1 of the current year. on may 8, sharp invested an additional 10,000 in the partnership. during the year, sharp and townson withdrew 25,000 and 45,000 respectively. after closing all expense and revenue accounts at the end of the year, income summary has a credit balance of 90,000, that sharp and townson have agreed to split on a 2:1 basis, respectively. Journalize the entries to close the income summary account and the drawing accounts ......Explanation / Answer
Hi, Please find the answers as follows: Part A: Income Summary Journal Entry: Income Summary Dr. 90000 Sharp Capital Cr. 60000 Townson Capital Cr. 30000 Drawing Accounts Journal Entry Sharp Capital Dr. 25000 Townson Capital Dr. 45000 Sharp Drawing Cr. 25000 Townson Drawing Cr. 45000 Part B: Statement of Owner's Equity Sharp Opening Capital = 60000 Add Additional Investment made during the year = 10000 Add Net Income = 60000 Less Withdrawals = 25000 Closing Capital = 105000 Townson Opening Capital = 120000 Add Additional Investment made during the year = 0 Add Net Income = 30000 Less Withdrawals = 45000 Closing Capital = 105000 Total Opening Capital = 180000 Add Additional Investment made during the year = 10000 Add Net Income = 90000 Less Withdrawals = 70000 Closing Capital = 210000 Thanks.
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