On January 1, 2020, Jacky Wu and Tim Lee Decided

question 141

Essay

On January 1, 2020, Jacky Wu and Tim Lee decided to form a partnership, dividing all profits and losses equally and by making the following investments: On December 31, 2020, the partnership reported a profit for the year of $ 28,000. On January 1, 2021, Wu and Lee agreed to accept Jody Smith into the partnership by purchasing 25% of partnership interest for $ 165,000 cash. The partnership agreement is amended to provide for the following sharing of profit and losses: For the year ended December 31, 2021, profit was $ 330,000.
Instructions
a) Journalize the following transactions:
(1) the initial contributions to the partnership by Wu and Lee on January 1, 2020.
(2) the allocation of the profit to the partners at the end of December 2020.
(3) the purchase of the partnership interest by Smith on January 1, 2021.
b) Prepare a schedule to show the division of profit at December 31, 2021.

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