Solution Allocation of Partnership Income

Jul 10th, 2016
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Solution Two people are starting a small IT firm. They come to you for advice on how to form a partnership. They have listed 2 scenarios and are asking you how to make journal entries for each one of the following transactions:

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Two people are starting a small IT firm. They come to you for advice onhow to form a partnership. They have listed 2 scenarios and are asking youhow to make journal entries for each one of the following transactions:1 Two partners, A and B, start a partnership.Partner As investment is the following:Cash: $20,000Inventory: $30,000Accounts payable: $50,000Computer equipment: $40,000Accumulated depreciation: $20,000Partner Bs investment is the following:Cash: $10,000Computer software: $20,0002 Two partners, Small and Big, form a partnership in which Small invested $40,000 andBig invested $60,000 for a total capital of $100,000. But Small devotes more timeto the business and earns more from the firm. They have agreed to share theprofits as follows:The first $20,000 is allocated on the partners capital balances.The next $3

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