Partnership

Learning Objectives ,[object Object],[object Object],[object Object],[object Object]

Learning Objectives (cont’d) ,[object Object],[object Object],[object Object],[object Object]

Partnership Defined ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Advantages ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

A partnership combines of the partners CAPITAL TALENT EXPERIENCE

Characteristics ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Characteristics (cont’d) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Partnership Agreement ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Accounting for a Partnership ,[object Object],[object Object],[object Object],[object Object],[object Object]

Accounting for a Partnership (cont’d) ,[object Object],[object Object],[object Object],[object Object],[object Object]

Formation of a Partnership ,[object Object],[object Object],[object Object],[object Object],Date Assets XXXX Liabilities XXX Partner’s Capital XXX being initial investment by partner

Allocation of Partnership Profits and Losses ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Allocation of Partnership Profits and Losses (cont’d) ,[object Object],June 30 P & L Summary XXX Profit Distribution XXX transfer of profit to distribution account June 30 Profit Distribution XXX Partner A, Capital XX Partner B, Capital XX distribution of profit to partners

Allocation of Partnership Profits and Losses (cont’d) ,[object Object],June 30 P & L Summary XXX Profit Distribution XXX transfer of profit to distribution account June 30 Profit Distribution XXX Partner A, Retained Earnings XX Partner B, Retained Earnings XX distribution of profit to partners

Allocation of Partnership Profits and Losses (cont’d) ,[object Object],[object Object],June 30 P & L Summary $60 000 Profit Distribution $60 000 transfer of profit to distribution account June 30 Profit Distribution $60 000 Becker, Capital $42 000 Cook, Capital $18 000 distribution of profit to partners

Allocation of Partnership Profits and Losses (cont’d) ,[object Object],[object Object],Capital investment Becker $150 000 Cook 100 000 $ 250 000 Profit allocation Becker (150 000/250 000) x 60 000 = $36 000 Cook (100 000/250 000) x 60 000 = 24 000 $ 60 000

Allocation of Partnership Profits and Losses (cont’d) ,[object Object],June 30 P & L Summary $60 000 Profit Distribution $60 000 transfer of profit to distribution account June 30 Profit Distribution $60 000 Becker, Capital $36 000 Cook, Capital $24 000 distribution of profit to partners

Allocation of Partnership Profits and Losses (cont’d) ,[object Object],June 30 P & L Summary $60 000 Profit Distribution $60 000 transfer of profit to distribution account June 30 Profit Distribution $60 000 Becker, Retained Earnings $36 000 Cook, Retained Earnings $24 000 distribution of profit to partners

Allocation of Partnership Profits and Losses (cont’d) ,[object Object],Becker Cook Total Interest on capital $150 000 x 10% $15 000 $100 000 x 10% $10 000 $25 000 Salaries to partners 18 000 10 000 28 000 Total interest & salary credited 33 000 20 000 53 000 Residual to be divided equally 3 500 3 500 7 000 Equity increase $36 500 $23 500 $60 000

Allocation of Partnership Profits and Losses (cont’d) ,[object Object],June 30 P & L Summary $60 000 Profit Distribution $60 000 transfer of profit to distribution account June 30 Profit Distribution $ 25 000 Becker, Capital $ 15 0 00 Cook, Capital $ 10 0 00 distribution of interest on capital to partners

Allocation of Partnership Profits and Losses (cont’d) ,[object Object],June 30 Profit Distribution $ 7 000 Becker, Capital $ 3 50 0 Cook, Capital $ 3 500 distribution of residual profit to partners June 30 Profit Distribution $ 28 000 Becker, Capital $ 18 0 00 Cook, Capital $ 10 0 00 distribution of salaries to partners

Allocation of Partnership Profits and Losses (cont’d) ,[object Object],June 30 P & L Summary $60 000 Profit Distribution $60 000 transfer of profit to distribution account June 30 Profit Distribution $ 25 000 Becker, Retained Earnings $ 15 0 00 Cook, Retained Earnings $ 10 0 00 distribution of interest on capital to partners

Allocation of Partnership Profits and Losses (cont’d) ,[object Object],June 30 Profit Distribution $ 7 000 Becker, Retained Earnings $ 3 50 0 Cook, Retained Earnings $ 3 500 distribution of residual profit to partners June 30 Profit Distribution $ 28 000 Becker, Retained Earnings $ 18 0 00 Cook, Retained Earnings $ 10 0 00 distribution of salaries to partners

Drawings and Loans Made by Partners ,[object Object],20 March Partner , Drawings XXX Cash at Bank XXX cash drawings by partner 30 June Partner , Capital XXX Partner , Drawings XXX closing entry for partner’s drawings

Drawings and Loans Made by Partners (cont’d) ,[object Object],20 Mar Partner , Drawings XXX Cash at Bank XXX cash drawings by partner 30 June Partner , Capital XXX Partner , Retained Earnings XXX closing entry for partner’s drawings

Drawings and Loans Made by Partners (cont’d) ,[object Object],30 June Partner , Capital XXX Profit Distribution XXX charging interest on drawings ,[object Object],30 June Partner, Retained Earnings XXX Profit Distribution XXX charging interest on drawings

Loans or Advances Date Cash at Bank XX Advance from partner A XX Date Interest expense X Cash at bank/Interest Payable X

Financial Statements ,[object Object],[object Object],[object Object]

Financial Statements (cont’d) ,[object Object],[object Object],[object Object],[object Object]

Partnership

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Viewers also liked

Viewers also liked (20)

Similar to Partnership

Similar to Partnership (20)

More from Alamgir Alwani

More from Alamgir Alwani (19)

Recently uploaded

Recently uploaded (20)

Partnership