On June 30, Allie Hayes and Mandy McKay formed a partnership. The women agree to
ID: 2470408 • Letter: O
Question
On June 30, Allie Hayes and Mandy McKay formed a partnership. The women agree to invest equal amounts of capital. Hayes invests her proprietorship's assets and liabilities (credit balances in parentheses), as follows: On June 30, McKay invests cash in an amount equal tot that market value of Hayes' partnership capital. The partners Hayes will earn two-thirds of partnership profits because s age the business. McKay agrees to accept one-third of the profits. the remainder of the year, the partnership earns net income of ' Hayes' drawings are $39,000, and McKay s drawings are. Requirements Journalize the partners' initial investments, (pp. 600 -601). Prepare the partnership balance sheet immediately after its formatio on June 30. (p. 601)Explanation / Answer
a Jouranl Entry Initial Investment Hayes's Date Account Title Dr $ Cr $ June 30. Capital -Hayes's 40,000 Accounts Receivable 7,000 Inventory 24,000 Preapid Expenses 1,000 Office Equipment 27,000 Accounts Payable 19,000 June 30. Cash 40,000 Capital -Mckay 40,000 Income distribution Net Income during the year 90,000 Hayes's share @2/3rd= 60,000 McKay's share 30,000 b Partnership Balance Sheet As On June 30 ( immediately after partnership formation) Assets Amt $ Liabilities Amt $ Cash 40,000 Capital -Hayes's 40,000 Accounts Receivable 7,000 Capital -Mckay 40,000 Inventory 24,000 Accounts Payable 19,000 Preapid Expenses 1,000 Office Equipment 27,000 99,000 99,000
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