Chapter 12 - Partnership

Illustration, Page 12-8 (Assume L. Arbor and D. Barnett instead of A. Lau and T. Song) General Journal
Formation: Date Description Debit Credit
L. Arbor D. Barnett Total 2020
Cash ₱8,000 ₱9,000 ₱17,000 January 1 Cash ( 8,000)
Accounts Receivable ( 4,000) ( 4,000) Equipment ( 4,000)
Allowance for Doubtful Accounts ( (1,000) ( (1,000) L. Arbor, Capital ( 12,000)
Equipment ( 4,000) ( 4,000) Investment.
Investment ₱12,000 ₱12,000 ₱24,000
1 Cash ( 9,000)
Accounts Receivable ( 4,000)
Allowance for Doubtful Accounts ( 1,000)
D. Barnett, Capital ( 12,000)
Investment.

Operations: Closing Entries

AB Company 1. Transfer Revenue to Income Summary.
Income Statement (Partial) 2. Transfer Expenses to Income Summary.
For the Year Ended December 31, 2020 3. Transfer Net Income to Capital.
Net Income ₱32,000 4. Transfer Drawing to Capital.
Division of Net Income: L. Arbor D. Barnett Total
Equally ₱16,000 ₱16,000 ₱32,000 Closing Entries
2020
December 31 Sales xxx
AB Company Income Summary xxx
Partners' Capital Statement Transfer revenue to income summary.
For the Year Ended December 31, 2020
L. Arbor D. Barnett Total 31 Income Summary xxx
Capital, January 1, 2020 ₱12,000 ₱12,000 ₱24,000 Operating Expenses xxx
Net Income per Statement ( 16,000) ( 16,000) ( 32,000) Transfer expenses to income summary.
Total ₱28,000 ₱28,000 ₱56,000
Less Withdrawals ( 8,000) ( 6,000) ( 14,000) 31 Income Summary ( 32,000)
Capital, December 31, 2020 ₱20,000 ₱22,000 ₱42,000 L. Arbor, Capital ( 16,000)
D. Barnett, Capital ( 16,000)
Transfer income to capital.
AB Company
Statement of Financial Position (Partial) 31 L. Arbor, Capital ( 8,000)
December 31, 2020 D. Barnett, Capital ( 6,000)
L. Arbor, Drawing ( 8,000)
Liabilities and Partners' Equity D. Barnett, Drawing ( 6,000)
Liabilities: ₱xxx Transfer drawing to capital.
Partners' Equity:
L. Arbor, Capital per Statement ₱20,000
D. Barnett, Capital per Statement ( 22,000)
Total Partners' Equity ( 42,000)
Total Liabilities and Partners' Equity ₱xxx
Illustration, Page 12-10 Page 12-11

Operations:
Kingslee Company Kingslee Company
Income Statement (Partial) Income Statement (Partial)
For the Year Ended December 31, 2020 For the Year Ended December 31, 2020
Net Income ₱22,000 Net Income ₱18,000
Division of Net Income: Sara King Ray Lee Total Division of Net Income: Sara King Ray Lee Total
Salary Allowance ₱8,400 ₱6,000 ₱14,400 Salary Allowance ₱8,400 ₱6,000 ₱14,400
Interest - 10% Beginning Capital ( 2,800) ( 2,400) ( 5,200) Interest - 10% Beginning Capital ( 2,800) ( 2,400) ( 5,200)
Remaining Income - Equally ( 1,200) ( 1,200) ( 2,400) Remaining Income - Equally ( (800) ( (800) ( (1,600)
Net Income ₱12,400 ₱9,600 ₱22,000 Net Income ₱10,400 ₱7,600 ₱18,000

Kingslee Company Kingslee Company

Partners' Capital Statement Partners' Capital Statement
For the Year Ended December 31, 2020 For the Year Ended December 31, 2020
Sara King Ray Lee Total Sara King Ray Lee Total
Capital, January 1, 2020 ₱28,000 ₱24,000 ₱52,000 Capital, January 1, 2020 ₱28,000 ₱24,000 ₱52,000
Additional Investment ( 2,000) ( 2,000) Additional Investment ( 2,000) ( 2,000)
Net Income per Statement (12,400) ( 9,600) ( 22,000) Net Income per Statement (10,400) ( 7,600) ( 18,000)
Total ₱42,400 ₱33,600 ₱76,000 Total ₱40,400 ₱31,600 ₱72,000
Less Withdrawals ( 7,000) ( 5,000) ( 12,000) Less Withdrawals ( 7,000) ( 5,000) ( 12,000)
Capital, December 31, 2020 ₱35,400 ₱28,600 ₱64,000 Capital, December 31, 2020 ₱33,400 ₱26,600 ₱60,000

Kingslee Company Kingslee Company

Statement of Financial Position (Partial) Statement of Financial Position (Partial)
December 31, 2020 December 31, 2020

Liabilities and Partners' Equity Liabilities and Partners' Equity

Liabilities (Assumed amount) ₱115,000 Liabilities: ₱115,000
Partners' Equity: Partners' Equity:
Sara King, Capital per Statement ₱35,400 Sara King, Capital per Statement ₱33,400
Ray Lee, Capital per Statement (28,600) Ray Lee, Capital per Statement (26,600)
Total Partners' Equity ( 64,000) Total Partners' Equity ( 60,000)
Total Liabilities and Partners' Equity ₱179,000 Total Liabilities and Partners' Equity ₱175,000