Chapter 5
Partnerships
222
Required
a) When the partnership is formed, show the account balances that will be listed in the
company’s books.
Accounts
Debit
Credit
Cash
Accounts Receivable
Allowance for Doubtful Accounts
Equipment
Accumulated Depreciation
Building
Bank Loan
Note Payable
Biyanka Lee, Capital
Bob Fire, Capital
Larry Ding, Capital
Freeda Red, Capital
Total
b) Earnings are equally divided among the partners. During 2016, the company earned a net
income of $360,000. Prepare a journal entry on December 31, 2016 to close the income
summary account at year-end.
Date
Account Title and Explanation
Debit
Credit
