LESSON 23-1
Forming a Partnership
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
2
INITIAL INVESTMENTS BY OWNERS
page 676
January 1. Received cash from partner, Sawyer Hess, as an initial
investment, $15,000.00. Receipt No. 1.
January 1. Received cash, $10,000.00, and office equipment valued at
$5,000.00, from partner, Kendra Sullivan, as an initial investment.
Receipt No. 2.
1
2
3
4
1. Write the date.
2. Write the account titles.
3. Write the receipt numbers.
4
5
4. Write the debit and credit amounts.
5. Write the debits to Cash.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 23-1
3
WITHDRAWAL OF CASH BY PARTNER
page 677
January 15. Kendra Sullivan, partner, withdrew cash for personal
use, $500.00. Check No. 10.
1
2
3
4
5
1. Write the date.
2. Write the title of the account debited.
3. Write the check number.
4. Write the debit amount.
5. Write the credit amount.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 23-1
4
WITHDRAWAL OF MERCHANDISE
BY PARTNER
page 678
January 15. Sawyer Hess, partner, withdrew merchandise for
personal use, $200.00. Memorandum No. 1.
2
3
1
4
5
1. Write the date.
2. Write the account title.
3. Write the memorandum number.
6
4. Write the debit amount.
5. Write the account title.
6. Write the credit amount.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 23-1
5
TERMS REVIEW
page 679
 partnership
 partner
 partnership agreement
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 23-1
LESSON 23-2
Distribution of Net Income
and Owners’ Equity
Statements
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
7
DISTRIBUTION OF NET INCOME
STATEMENT
page 680
1
2
3
4
5
6
7
8
1. Heading
2. First partner’s name
3. First partner’s share of net
income
4. Second partner’s name
5. Second partner’s share
of net income
6. Write Net Income
7. Total net income
8. Double lines
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 23-1
8
DISTRIBUTION OF NET INCOME STATEMENT
WITH UNEQUAL DISTRIBUTION OF EARNINGS
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
page 681
LESSON 23-1
9
PARTNERS’ CAPITAL AND DRAWING
ACCOUNTS
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
page 682
LESSON 23-1
10
OWNERS’ EQUITY STATEMENT
1
2
4
6
3
5
7
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
page 683
1. Heading
2. First partner’s
name
3. First partner’s
ending capital
4. Second partner’s
name
5. Second partner’s
ending capital
6. Total Owners’
Equity
7. Double lines
LESSON 23-1
11
OWNERS’ EQUITY STATEMENT WITH AN
ADDITIONAL INVESTMENT AND A NET LOSS
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
page 684
LESSON 23-1
12
BALANCE SHEET FOR A PARTNERSHIP
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
page 684
LESSON 23-1
13
TERMS REVIEW
page 685
 distribution of net income statement
 owners’ equity statement
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 23-1
LESSON 23-3
Dissolving a Partnership
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
15
ACCOUNT BALANCES BEFORE
REALIZATION
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
page 686
LESSON 23-1
16
GAIN ON REALIZATION
page 686
August 1, 20--. Received cash from sale of truck, $13,000.00: original cost,
$20,000.00; total accumulated depreciation recorded to date, $8,000.00.
Receipt No. 316.
Value of Asset Received
Cash
$13,000.00
–
–
Book Value of
Asset Sold
Cost
$20,000.00
Accum. Depr.
8,000.00
Book Value
$12,000.00
=
Gain on
Realization
1
=
$1,000.00
2
1. Calculate the gain.
2. Record the entry.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 23-1
17
LOSS ON REALIZATION
page 687
August 1. Received cash from sale of supplies, $1,100.00; balance
of supplies account, $1,500.00. Receipt No. 317.
Value of Asset Received
–
Cash
–
$1,100.00
Book Value of
Asset Sold
Supplies
$1,500.00
=
Loss on
Realization
=
$(400.00)
1
2
1. Calculate the loss.
2. Record the entry.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 23-1
18
LIQUIDATING LIABILITIES
page 688
August 4, 20--. Paid cash to all creditors for the amounts owed,
$4,000.00. Check No. 422.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 23-1
ACCOUNT BALANCES AFTER LIQUIDATION
OF NONCASH ASSETS AND PAYMENT OF
LIABILITIES
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
19
page 688
LESSON 23-1
20
DISTRIBUTING LOSS OR GAIN ON
REALIZATION TO PARTNERS
page 689
August 6, 20--. Recorded distribution of gain on realization: to Adam
Walker, $360.00; to Shirley Jeter, $240.00. Memorandum No. 412.
Balance of Loss and
Gain on Realization
Walker
Jeter
Total
$600.00
$600.00
×
Fixed
Percentage
=
×
×
60%
40%
=
=
Share of the Balance of Loss
and Gain on Realization
2
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
$360.00
240.00
$600.00
1
1. Calculate
each partner’s
share of gain
or loss.
2. Record entry
to distribute
gain or loss.
LESSON 23-1
21
DISTRIBUTING REMAINING CASH TO
PARTNERS
page 689
August 6. Recorded final distribution of remaining cash to partners:
to Adam Walker, $18,360.00; to Shirley Jeter, $12,740.00. Check
Nos. 423 and 424.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 23-1
22
TERMS REVIEW
page 690
 liquidation of a partnership
 realization
 limited liability partnership (LLP)
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 23-1