Answer:
Eckert and Kelley Partnership
1 Journal Entries:
Debit Cash $82,500
Credit Eckert, Capital $82,500
To record the contribution made by the partner.
Debit Land $60,000
Debit Building $100,000
Credit Long-term note payable $92,500
Credit Kelley, Capital $67,500
To record the contribution made by the partner.
Debit Income Summary $90,000
Credit Eckert, Capital $58,250
Credit Kelley, Capital $31,750
To record the sharing of net income by partners.
Debit Eckert, Capital $34,000
Credit Cash $34,000
To close cash withdrawal by Eckert to the capital account.
Debit Kelley, Capital $20,000
Credit Cash $20,000
To close cash withdrawal by Kelley to the capital account.
2. Balances of the Partners' Capital Accounts as of December 31, 2017:
Eckert Kelley
Balances $106,750 $79,250
Explanation:
a) Data and Calculations:
Eckert Kelley
Capital contributions:
Cash $82,500
Land $60,000
Building 100,000
Long-term note payable (92,500)
Assets' bases $82,500 $67,500
Annual salary allowance 25,000
Annual interest allowance 8,250 6,750
Cash drawings 34,000 20,000
Net income at December 31, 2017 = $90,000
Sharing of net income:
Eckert Kelley Total
Annual salary allowance 25,000 $25,000
Annual interest allowance 8,250 6,750 15,000
Sharing of profit (1:1) 25,000 25,000 50,000
Total $58,250 $31,750 $90,000
Analysis:
Cash $82,500 Eckert, Capital $82,500
Land $60,000 Building $100,000 Long-term note payable $92,500 Kelley, Capital $67,500
Eckert, Capital $34,000 Cash $34,000
Kelley, Capital $20,000 Cash $20,000
Income Summary $90,000 Eckert, Capital $58,250 Kelley, Capital $31,750
Balances of the Partners' Capital Accounts as of December 31, 2017:
Eckert Kelley
Assets' bases $82,500 $67,500
Income summary 58,250 31,750
Cash withdrawals (34,000) (20,000)
Balances $106,750 $79,250
