Horngren’s Accounting, Volume 2, 11th Canadian Edition by Tracie Miller-Nobles Solution manual

This problem will help students learn to allocate partnership profits and losses to the partners. This allocation is important because one of the main points of contention among partners is the sharing of profits and losses. Learning this material should help partners design an agreement that is understandable. In turn, that may help the partners avoid disagreements.

                                                                          (25–35 min.) P12-3B
Req. 1
General Journal
Date
2020Account Titles and ExplanationsPost. Ref.DebitCredit
Sep.30Revenues 928,000 
       Income Summary  928,000
  To close revenues.   
      
 30Income Summary 796,000 
       Expenses  796,000
  To close expenses.   
      
 30Income Summary 132,000 
       T. Shitang, Capital  26,400
       D. Yamamoto, Capital  39,600
       J. Ishikawa, Capital  66,000
  To close income summary.   
      
 30T. Shitang, Capital 99,000 
       T. Shitang, Withdrawals  99,000
      
 30D. Yamamoto, Capital 81,000 
       D. Yamamoto, Withdrawals  81,000
      
 30J. Ishikawa, Capital 40,000 
       J. Ishikawa, Withdrawals  40,000
  To close partner withdrawal accounts.   
Income Summary: $928,000 – $796,000 = $132,000
Shitang: $132,000 × 2/10 = $26,400
Yamamoto: $132,000 × 3/10 = $39,600
Ishikawa: $132,000 × 5/10 = $66,000

                                                                            (continued) P12-3B
Req. 2
 
T. Shitang, Capital
  Balance125,000
Withdrawals99,000Net income26,400
  Ending balance52,400

 
 
 
D. Yamamoto, Capital
  Balance97,000
Withdrawals81,000Net income39,600
  Ending balance55,600

 
 
 
J. Ishikawa, Capital
  Balance46,000
Withdrawals40,000Net income66,000
  Ending balance72,000

 
 

 
                                                       (15–20 min.) P12-4B
a.
General Journal
Date
2020Account Titles and ExplanationsPost. Ref.DebitCredit
Mar.31Jennifer Lowe, Capital 150,000 
       Helen Fluery, Capital  150,000
  To transfer J. Lowe’s equity in the   
  partnership to H. Fluery.   
 
b.
General Journal
Date
2020Account Titles and ExplanationsPost. Ref.DebitCredit
Mar.31Cash 100,000 
       Helen Fluery, Capital  100,000
  To admit H. Fluery as a partner with a   
  one-fourth interest in the business.   
      
 
Partnership capital before Fluery is admitted ($50,000 + $100,000 + $150,000)                                                   $300,000