Groucho,Harpo and Chico Go into Partnership on January 1,2014

Essay

Groucho,Harpo and Chico go into partnership on January 1,2014.Groucho contributes $90,000,Harpo $70,000,and Chico $40,000 to a business called Marx Brothers' Partnership.On a monthly basis,each partner is allocated income and is allowed to receive cash from the business in proportion to the capital they provided.Groucho receives $2,700 cash per month.
a.Prepare the journal entry for the initial investment.
b.Prepare the journal entry that would be made in one month for the monthly distribution.
c.Prepare the journal entry for the allocation of an annual net income of $84,000.For purposes of this journal entry,assume sales were $116,000 and that all expenses (totaling $32,000)were recorded in a single account called operating expenses.
d.Prepare the journal entry for the closing of the drawings accounts at the end of the year.
e.Prepare a Statement of Partners' Equity (assume no additional investments made).