On May 1, Fine and Max Formed a Partnership

question 122

Essay

On May 1, Fine and Max formed a partnership. Fine contributed cash of $90,000 and equipment valued at $152,000. Max contributed land valued at $120,000 and a building valued at $250,000. The partnership also assumed responsibility for Max's $110,000 long-term note payable associated with the land and building. The partners agreed to share income as follows: Fine is to receive a salary allowance of $38,000, both are to receive an annual interest allowance of 8% of their beginning-year capital investments, and any remaining income or loss is to be shared equally. During the year, Fine withdrew $40,000 and Max withdrew $42,000 cash. After the adjusting and closing entries are made to the revenue and expense accounts at the end of the year, the Income Summary account had a credit balance of $140,000. Prepare the journal entries to record (a) the partners' initial capital investments, (b) their cash withdrawals, and (c) closing of both the Withdrawals and Income Summary accounts.

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Definitions:

Zeal

Great energy, enthusiasm, or eagerness in pursuit of a cause or an objective.

Mindfulness-Based Stress Reduction

An evidence-based program that uses mindfulness meditation to help people manage stress, anxiety, depression, and pain.

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The process of reducing tension and stress, bringing the mind and body into a state of calm and peace.

Awareness

The state of being conscious or cognizant of something, including surroundings, situations, or personal reactions.