Asked by Annisa Rahma Putri on Apr 26, 2024
Verified
Juanita Gomez and Brandi Toomey have formed the GT Partnership and have capital balances of $130000 and $100000 respectively on January 1 2017. On June 1 2017 Toomey invested an additional $30000. Also during the year Gomez withdrew $60000 and Toomey withdrew $48000. Sales for the year amounted to $360000 and expenses were $240000. Gomez and Toomey share income and losses on a 3:1 basis.
Instructions
(a) Prepare the closing entries at December 31 2017 for the GT Partnership.
(b) Prepare a partners' capital statement for 2017.
Capital Balances
Capital balances reflect the amount of money that owners have invested in a company, including retained earnings and additional contributions.
Net Income
The net income of a business once all costs, such as operating expenses and taxes, are subtracted from its total earnings.
Income Sharing
An arrangement where generated income is distributed among participants or partners, often in proportion to their investment or contribution.
- Assess the splitting of net gains among partners according to diverse agreements.
- Generate a report on a partner's financial contribution and catalog transactions involving the partnership.
Verified Answer
MH
Maggie HammondApr 30, 2024
Final Answer :
(a)
Sales Revenue 360,000 Expenses 240,000 Income Summary 120,000Income Summary 120,000Gomez, Capital ($120,000×75%) 90,000Tonney, Capital ($120,000×25%) 30,000 Gomez, Capital 60,000 Toomey, Capital48,000 Gomez, Drawings 60,000 Toomey, Drawings48,000\begin{array}{llr} \text { Sales Revenue } &360,000\\ \text { Expenses } &&240,000\\ \text { Income Summary } &&120,000\\\\ \text {Income Summary } &120,000\\ \text {Gomez, Capital \( (\$ 120,000 \times 75 \%) \) } &&90,000\\ \text {Tonney, Capital \( (\$ 120,000 \times 25 \%) \) } &&30,000\\\\ \text { Gomez, Capital } &60,000\\ \text { Toomey, Capital} &48,000\\ \text { Gomez, Drawings } &&60,000\\ \text { Toomey, Drawings} &&48,000\\\end{array} Sales Revenue Expenses Income Summary Income Summary Gomez, Capital ($120,000×75%) Tonney, Capital ($120,000×25%) Gomez, Capital Toomey, Capital Gomez, Drawings Toomey, Drawings360,000120,00060,00048,000240,000120,00090,00030,00060,00048,000
(b)
GT PartnershipPartners’ Capital StatementFor the Year Ended December 31, 2017 Capital, January 1, 2017 $130,000$100,000$230,000 Add: Additional Investment 30,00030,000 Net Income 90,000‾30,000‾120,000‾220,000160,000380,000 Less: Drawings 60,000‾48,000‾109,000‾ Capital, December 31,2017 $160,000‾$112,000‾$272,000‾\begin{array}{c}\text {GT Partnership}\\\text {Partners' Capital Statement}\\\text {For the Year Ended December 31, 2017}\\\\\begin{array}{llr} \text { Capital, January 1, 2017 } &\$130,000&\$100,000&\$230,000\\ \text { Add: Additional Investment } &&30,000&30,000\\ \text { Net Income } &\underline{90,000}&\underline{30,000}&\underline{120,000}\\&220,000&160,000&380,000\\ \text { Less: Drawings } &\underline{60,000}&\underline{48,000}&\underline{109,000}\\ \text { Capital, December 31,2017 } &\underline{\$160,000}&\underline{\$112,000}&\underline{\$272,000}\\\end{array}\end{array}GT PartnershipPartners’ Capital StatementFor the Year Ended December 31, 2017 Capital, January 1, 2017 Add: Additional Investment Net Income Less: Drawings Capital, December 31,2017 $130,00090,000220,00060,000$160,000$100,00030,00030,000160,00048,000$112,000$230,00030,000120,000380,000109,000$272,000
Sales Revenue 360,000 Expenses 240,000 Income Summary 120,000Income Summary 120,000Gomez, Capital ($120,000×75%) 90,000Tonney, Capital ($120,000×25%) 30,000 Gomez, Capital 60,000 Toomey, Capital48,000 Gomez, Drawings 60,000 Toomey, Drawings48,000\begin{array}{llr} \text { Sales Revenue } &360,000\\ \text { Expenses } &&240,000\\ \text { Income Summary } &&120,000\\\\ \text {Income Summary } &120,000\\ \text {Gomez, Capital \( (\$ 120,000 \times 75 \%) \) } &&90,000\\ \text {Tonney, Capital \( (\$ 120,000 \times 25 \%) \) } &&30,000\\\\ \text { Gomez, Capital } &60,000\\ \text { Toomey, Capital} &48,000\\ \text { Gomez, Drawings } &&60,000\\ \text { Toomey, Drawings} &&48,000\\\end{array} Sales Revenue Expenses Income Summary Income Summary Gomez, Capital ($120,000×75%) Tonney, Capital ($120,000×25%) Gomez, Capital Toomey, Capital Gomez, Drawings Toomey, Drawings360,000120,00060,00048,000240,000120,00090,00030,00060,00048,000
(b)
GT PartnershipPartners’ Capital StatementFor the Year Ended December 31, 2017 Capital, January 1, 2017 $130,000$100,000$230,000 Add: Additional Investment 30,00030,000 Net Income 90,000‾30,000‾120,000‾220,000160,000380,000 Less: Drawings 60,000‾48,000‾109,000‾ Capital, December 31,2017 $160,000‾$112,000‾$272,000‾\begin{array}{c}\text {GT Partnership}\\\text {Partners' Capital Statement}\\\text {For the Year Ended December 31, 2017}\\\\\begin{array}{llr} \text { Capital, January 1, 2017 } &\$130,000&\$100,000&\$230,000\\ \text { Add: Additional Investment } &&30,000&30,000\\ \text { Net Income } &\underline{90,000}&\underline{30,000}&\underline{120,000}\\&220,000&160,000&380,000\\ \text { Less: Drawings } &\underline{60,000}&\underline{48,000}&\underline{109,000}\\ \text { Capital, December 31,2017 } &\underline{\$160,000}&\underline{\$112,000}&\underline{\$272,000}\\\end{array}\end{array}GT PartnershipPartners’ Capital StatementFor the Year Ended December 31, 2017 Capital, January 1, 2017 Add: Additional Investment Net Income Less: Drawings Capital, December 31,2017 $130,00090,000220,00060,000$160,000$100,00030,00030,000160,00048,000$112,000$230,00030,000120,000380,000109,000$272,000
Learning Objectives
- Assess the splitting of net gains among partners according to diverse agreements.
- Generate a report on a partner's financial contribution and catalog transactions involving the partnership.