T. Halo, K. Rose, and J. Lamp share profit on a 5:3:2 basis, respectively. They have capital balances of $36,000, $28,000, and $16,000, respectively, when R. Zahn is admitted to the partnership on July 1 of the current year.


Instructions


Prepare the journal entry to record the admission of Zahn under each of the following independent assumptions:
(a) Zahn purchases 33 (a) 1/3% of Halo's equity for $20,000.

(b) Zahn purchases 50% of Rose's equity for $20,000.

(c) Zahn purchases 100% of Lamp's equity for $20,000.

(d) Zahn invests $20,000 cash in the partnership for a 20% interest

Julie Lane, Sara Miles, and Amber Noll have capital balances of $50,000, $40,000, and $30,000, respectively. The profit and loss ratio is 5:3:2. Assume Noll withdraws from the partnership on December 31 of the current year under each of the following independent conditions:
1. Lane and Miles agree to purchase Noll's equity by paying $17,000 each from their personal assets. Each purchaser receives 50% of Noll's equity.

2. Miles agrees to purchase all of Noll's equity by paying $35,000 cash from her personal assets.

3. Lane agrees to purchase all of Noll's equity by paying $25,000 cash from her personal assets.

4. Noll withdraws $30,000 cash from the partnership

Consulting practice. They sign a partnership agreement to split profits in a 2:3:4 ratio for Isabelle, Aida, and Channade, respectively. The following are transactions for MKF Marketing:

2010
Feb. 14 The partners contribute assets to the partnership at the following agreed amounts:

I. Moreau A. Krneta C. Fenandoe
Cash $ 9,000 $12,000 $18,000
Furniture 15,000
Office equipment 24,000
Graphic equipment 40,000
Total $24,000 $36,000 $58,000







They also agree that the partnership will assume responsibility for Channade's accounts payable of $10,000.
Dec. 20 The partners agree to withdraw a total of $72,000 cash as a “year-end bonus.”Each partner will receive a share proportionate to her profit-sharing ratio. No other withdrawals were made during the year.
31 Total profit for 2010 was $81,900.


2011
Jan. 5 The three partners agree to admit Carolyn Wells to the partmership. Carolyn will pay Channade $30,000 cash for 50% of her interest in the partnership. The profitsharing ratio will be changed so that Carolyn is allocated 50% of what was previously allocated to Channade. The partnership's name is changed to MKFW Marketing.
Dec. 20 The partners agree to pay another “year-end bonus.” The total amount withdrawn is $91,800. Each partner will receive a share proportionate to her profitsharing ratio. No other withdrawals were made during the year.
31 Total profit for 2011 was $103,050.

2012
Jan. 2 Channade withdraws from the partnership. The partners agree the partnership will pay Channade $25,550 cash. The partnership's name is changed to MKW Marketing.

Instructions

(a) Record the above transactions. For the profit earned each year, calculate how it is to be allocated and record closing the income summary account.

(b) Prepare the statement of partners' equity for 2011.

(c) Calculate the balance in each partner's capital account on January 2, 2012, after Channade has withdrawn.


Taking It Further Every time a new partner is admitted to a partnership or a partner withdraws from a partnership, it is necessary to change the name of the partnership to reflect the fact that a new partnership has been formed. Do you agree or disagree? Explain.

On March 2, 2010, Zoe Moreau, Karen Krneta, and Veronica Visentin start a partnership to operate a personal coaching and lifestyle consulting practice for professional women. Zoe will focus on work-life balance issues, Karen on matters of style, and Veronica on health and fitness. They sign a partnership agreement to split profits in a 3:2:3 ratio for Zoe, Karen, and Veronica, respectively. The following are the transactions for MKV Personal Coaching:

2010
Mar. to the partners contribute assets to the partnership at the following agreed amounts:


Z. Moreau K. Krneta V. Visentin
Cash $15,000 $10,000 $20,000
Furniture 17,000
Office equipment 18,000
Fitness equipment 13,000
Total $33,000 $27,000 $33,000


They also agree that the partnership will assume responsibility for Karen's note payable of $5,000.
Dec. 20 Zoe, Karen, and Veronica each withdraw $30,000 cash as a “year-end bonus.” No other withdrawals were made during the year.
31 Total profit for 2010 was $110,000.
2011
Jan. 5 Zoe and Veronica approve Karen's request to withdraw from the partnership for personal reasons. They agree to pay Karen $15,000 cash from the partnership.
6 Zoe and Veronica agree to change their profit-sharing ratio to 4:5, respectively.
Dec. 20 Zoe and Veronica withdraw $42,750 and $45,000 cash, respectively, from the partnership.
31 Total profit for 2011 was $123,750.
2012
Jan. 4 Zoe and Veronica agree to admit Dela Hirjikaka to the partnership. Dela will focus on providing training in organizational skills to clients. Dela invests $31,000 cash for a 25% ownership in the partnership.

Instructions

(a) Record the above transactions. For the profit earned each year, calculate how it is to be allocated and record the closing of the income summary account.

(b) Prepare the partners' equity section of the balance sheet after Dela is admitted to the partnership.

Taking It Further Every time a new partner is admitted to a partnership or a partner withdraws from a partnership, it is necessary to completely close the accounting records of the existing partnership and start new accounting records for the new partnership. Do you agree or disagree? Explain.

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