pls.hep me to solve tjis problem..
is anyone willing to solve please.
PROBLEM 1:
On Jan 1, 2011, the Rhiri, Brit & Keisha partnership is formed. Rhiri and Brit contribute cash of $30,000 and $20,000 respectively, while Keisha contributes assets with the following fair values:
Inventory $5,000
Land 22,000
Buildings 23,000
TOTAL CONTRIBUTIONS $50,000
The partners agree on a profit and loss sharing ratio of 3:2:5. During the first year, net income is $70,000 and the partners’ drawings are Rhirhi — $12,000, Brit —$15,000, and Keisha — $30,000.
Requirements :
1.Record the Initial investment made by each partners during Jan 1.
2.Entries to record withdrawals made by partners
Sure! I can help you with that.
Step 1: Record the Initial Investment made by each partner on January 1.
To record the initial investment, we need to create a capital account for each partner. Here's how you can record the investments made by each partner:
Rhiri's Investment:
Debit: Cash - $30,000
Credit: Rhiri's Capital Account - $30,000
Brit's Investment:
Debit: Cash - $20,000
Credit: Brit's Capital Account - $20,000
Keisha's Investment:
Debit: Inventory - $5,000
Debit: Land - $22,000
Debit: Buildings - $23,000
Credit: Keisha's Capital Account - $50,000
Step 2: Entries to Record Withdrawals made by partners.
To record the withdrawals made by each partner, we need to deduct the amount from their respective capital accounts. Here's how you can record the withdrawals:
Rhiri's Withdrawal:
Debit: Rhiri's Capital Account - $12,000
Credit: Cash - $12,000
Brit's Withdrawal:
Debit: Brit's Capital Account - $15,000
Credit: Cash - $15,000
Keisha's Withdrawal:
Debit: Keisha's Capital Account - $30,000
Credit: Cash - $30,000
Please note that these entries are for illustrative purposes only, and you should consult with an accounting professional for the appropriate entries based on your specific circumstances.
To solve Problem 1, we need to record the initial investments made by each partner and the entries to record the withdrawals made by the partners.
1. Recording the Initial Investments:
To record the initial investment made by each partner, we will create a capital account for each partner and record their contributions.
- Rhiri's investment:
Debit Rhiri's capital account: $30,000
Credit Cash account: $30,000
- Brit's investment:
Debit Brit's capital account: $20,000
Credit Cash account: $20,000
- Keisha's investment:
Debit Keisha's capital account: $50,000
Credit Inventory account: $5,000
Credit Land account: $22,000
Credit Buildings account: $23,000
2. Recording the Withdrawals made by Partners:
To record the withdrawals made by the partners, we will reduce their capital accounts.
- Rhiri's withdrawal:
Debit Rhiri's capital account: $12,000
Credit Cash account: $12,000
- Brit's withdrawal:
Debit Brit's capital account: $15,000
Credit Cash account: $15,000
- Keisha's withdrawal:
Debit Keisha's capital account: $30,000
Credit Cash account: $30,000
Note: The above entries will reflect the changes in each partner's capital account due to investments and withdrawals.
Overall, the journal entries for the transactions would be:
Jan 1:
Debit Rhiri's capital account: $30,000
Debit Brit's capital account: $20,000
Debit Keisha's capital account: $50,000
Credit Cash account: $50,000
Credit Inventory account: $5,000
Credit Land account: $22,000
Credit Buildings account: $23,000
Withdrawals - Rhiri:
Debit Rhiri's capital account: $12,000
Credit Cash account: $12,000
Withdrawals - Brit:
Debit Brit's capital account: $15,000
Credit Cash account: $15,000
Withdrawals - Keisha:
Debit Keisha's capital account: $30,000
Credit Cash account: $30,000
I hope this helps you solve Problem 1. If you have any further questions, feel free to ask.