Partnership Opening Entries Patty McShane and Betty Lou Blixt agreed on September 1 to go into business as partners. According to the agreement, McShane is to contribute $55,000 cash and Blixt is to contribute $80,000 cash. Provide a separate journal entry for the investment of each partner. Solution Partnership Opening Entries 1) Cash Dr. 55000 McShane Capital 55000 2) Cash Dr. 80000 Blixt Capital 80000 Entries for Allocation of Net Income 1) No agreement. So income shall be distributed in proportion to the capital invested by them. Spurlock = 80000*(100000/125000) =$64,000 Wilson = 80000*(25000/125000) = $16,000 Net Income Dr. 80000 Spurlock Capital 64000 Wilson Captal 16000 2) Spurlock = (100000*0.10) + (80000-10000-2500)/2 = $43,750 Wilson = (25000*0.10) + (80000-10000-2500)/2 = $36,250 Net Income Dr. 80000 Spurlock Capital 43750 Wilson Capital 36250 3) Spurlock = 35000 + (80000-35000-25000)/2 = $45,000 Wilson = 25000 + (80000-35000-25000)/2 = $ $35,000 Net Income Dr. 80000 Spurlock Capital 45000 Wilson Capital 35000 4) Spurlock = (100000*0.10)+ 35000+(80000-12500-60000)*0.75 = $50,625 Wilson = (25000*0.10) + 25000 + (80000-12500-60000)* 0.25 = $29,375 Net Income Dr. 80000 Spurlock Capital 50625 Wilson Capital 29375 .

1. Partnership Opening Entries Patty McShane and Betty Lou Blixt agreed on September 1 to go
into business as partners. According to the agreement, McShane is to contribute $55,000 cash
and Blixt is to contribute $80,000 cash. Provide a separate journal entry for the investment of
each partner.
Solution
Partnership Opening Entries
1) Cash Dr. 55000
McShane Capital 55000
2) Cash Dr. 80000
Blixt Capital 80000
Entries for Allocation of Net Income
1) No agreement. So income shall be distributed in proportion to the capital invested by them.
Spurlock = 80000*(100000/125000) =$64,000
Wilson = 80000*(25000/125000) = $16,000
Net Income Dr. 80000
Spurlock Capital 64000
Wilson Captal 16000
2) Spurlock = (100000*0.10) + (80000-10000-2500)/2 = $43,750
Wilson = (25000*0.10) + (80000-10000-2500)/2 = $36,250
Net Income Dr. 80000

2. Spurlock Capital 43750
Wilson Capital 36250
3) Spurlock = 35000 + (80000-35000-25000)/2 = $45,000
Wilson = 25000 + (80000-35000-25000)/2 = $ $35,000
Net Income Dr. 80000
Spurlock Capital 45000
Wilson Capital 35000
4) Spurlock = (100000*0.10)+ 35000+(80000-12500-60000)*0.75 = $50,625
Wilson = (25000*0.10) + 25000 + (80000-12500-60000)* 0.25 = $29,375
Net Income Dr. 80000
Spurlock Capital 50625
Wilson Capital 29375