Partnership f

Ralp Hartwig and

Data Section :
Contribution of Assets and Liabilities on 1 July 2012
Hartwig Wisdom
Fair Value Carrying a
Cash at bank $ 30,000 $ 22,500
Account receivable - $ 12,800
Inventory - $ 24,600
Land $ 180,000 -
Office equipment - $ 76,000
Account payable - $ 11,500
Bank loan - $ 18,000

Hartwig's contribution during the year :

Cash $ 12,000

Answer to part A : Initial investment

Journal entries
Cash at Bank
Land
Hartwig Capital

Cash at Bank

Inventory

Accounts Payable

Wisdom, Capital

Answer to part B :
HARTWIG AND WISDOM
Balance Sheet
As at 1 July 2012
CURRENT ASSETS
Cash at Bank
Accounts receivable
TOTAL CURRENT ASSETS

NON-CURRENT ASSETS

Office Equipment

TOTAL NON-CURRENT
ASSETS
TOTAL ASSETS

CURRENT LIABILITIES

Bank Loan
TOTAL CURRENT
LIABILITIES
TOTAL LIABILITIES

NET ASSETS

EQUITY
Capital, R Hartwig
Capital, A Wisdom
TOTAL EQUITY
 Partnership formation
Ralp Hartwig and Alice Wisdom

ilities on 1 July 2012

Wisdom
Fair Value
$ 22,500
$ 12,800
$ 23,800
-
$ 62,000
$ 11,500
$ 18,000

ring the year :

Answer to part C: using method 2

HARTWIG AND WISDOM

Statement of Changes in Partners Equity
30-Jun-13

CAPITAL

Capital balances 1 July

2012
Add: Additional
investment

Capital balances
30/6/2013
RETAINED EARNINGS
Profit allocation $56 000
x 60%

$56 000 x 40%

Less: Drawings
Balances 30/6/2013

TOTAL EQUITY
om

Partnership's profit

Hartwig Wisdom
Profits and losses ratio # 40%
Withdrawals in anticipation of profits $ 8,000 $ 16,000

using method 2
(Fixed Capital Accounts)
HARTWIG AND WISDOM
Statement of Changes in Partners Equity
30-Jun-13
Hartwig Wisdom Total
Solution File
PSHIP
Partnership: Division of Net Income

Data Section

Interest on original investment 15%

Salary - MacDuf $50,000
Salary - MacBeth 25,000
Net income 125,000

Answer Section

Division of Net Income

MacDuf MacBeth
Salary allowance
Interest allowance
Total
Excess of income over allowances
Net income
e

Net Income
Total