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Question
Sharp and Townson had capital balances of $60,000 and $120,000, respectively, on January 1 of the current year. On May 8, Sharp invested an additional $10,000 in the partnership. During the year, Sharp and Townson withdrew $25,000 and $45,000, respectively. The revenue account at the end of the year had a balance of $600,000, and the expense accounts had a balance of $510,000. Sharp and Townson have agreed to split net income on a 2:1 basis (2/3 to Sharp and 1/3 to Townson).
a. Prepare the statement of partnership equity for the current year.
b. Journalize the entries to close the revenue and expense accounts and the drawing accounts.
Answer
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