• HVP has assisted in the development of over 80 ambulatory care centers representing over $400
million in value.
• HVP has worked with over 200 hospitals nationwide.
• HVP is an employee-owned company. The founders of HVP personally fund the company. All
senior-level employees of HVP enjoy a degree of ownership and share in the success of HVP.
• Name, location, and nature of business
• Starting date of the agreement
• Life of the partnership
• Rights and duties of each partner
• Capital to be contributed by each partner
• Drawings of the partners
• Fiscal year and accounting method
• Method of allocating income or loss
• Dissolution and liquidation procedures
1. For each partner, and in total for all partners: beginning balances of capital, share of net income
or loss for the year, withdrawals for the year, and ending capital balance.
3. The capital account of the partner selling the interest is debited for the fractional share of the
4. A dissolution is the termination of the contract between the existing partners. Business operations
5. Skills, experience and reputation brought to the new business; time to be spent; amount of capital
Discussion Questions
Chapter Opener: Thinking Critically
ACCOUNTING FOR PARTNERSHIPS
CHAPTER 19
Students should recognize that partners carry some responsibility for the debts of the partnership and
benefit directly from company profits. Since partners benefit directly from the profits of the company,
they have a vested interest in making sure all the firm’s clients are satisfied with the products and
services they receive.
Fast Facts
Managerial Implications: Thinking Critically
Discussion Questions (continued)
6. a. The accounting records are closed and the net income or net loss is recorded and transferred to the
7. The drawing account for each partner is charged for cash withdrawn for any purpose (including salary
allowances), and other assets (such as merchandise taken by the partner from the business).
9. Each partner is empowered to act as an agent for the partnership, binding the firm by those acts if they
are within the normal scope of the partnership’s activities.
11. No. Salaries of the partners are only a factor in the allocation of net income or net loss.
13. The equity accounts are different. Individual capital and drawing accounts must be maintained for
each partner.
14. Records must be kept of all amounts owed to the sole proprietor because they are (usually) transferred
16. No. However, the individual partners pay income tax on their shares of the partnership’s income.
18. Unlimited liability of general partners; mutual agency; lack of continuity and difficulty of transfer of
ownership.
EXERCISE 19.1
PAGE
POST.
REF.
1 2013 1
EXERCISE 19.2
PAGE
POST.
REF.
1 2013 Accounts Receivable 12000000 1
2 Merchandise Inventory 9600000 2
GENERAL JOURNAL
DATE DESCRIPTION DEBIT CREDIT
GENERAL JOURNAL
DATE DESCRIPTION DEBIT CREDIT
EXERCISE 19.3
4800000
10800000
Joan Clay, Capital 5400000
17200000
James Dear, Capital
Total Liabilities and Partners’ Equity
Cash
The Leisure Room
Balance Sheet
May 1, 2013
Assets
EXERCISE 19.4
Chanda
Salary $96,000
Interest (10% × $408,000) 40,800
50% of net income after allowances (19,800)
Total share of net income to Chanda $117,000
Jones
EXERCISE 19.5
Reagan
Interest (10% × $120,000) $12,000
60% of balance after interest 135,360
EXERCISE 19.6
Raymond Zeidan
Salary $84,000
60% of balance after salary allowances 97,680
Total net income to Zeidan $181,680
Allocation of Net Income
Allocation of Net Income
EXERCISE 19.7
PAGE
POST.
REF.
1 2013 1
2 Dec. 31 Income Summary 9600000 2
12 To close Ferguson’s drawing account 12
EXERCISE 19.8
PAGE
POST.
REF.
1 2013 1
2 Dec. 31 Income Summary 2400000 2
EXERCISE 19.9
EXERCISE 19.10
Effect of revaluation: ($3,800)
Merchandise Inventory: 95,000
DATE DESCRIPTION DEBIT CREDIT
DATE DESCRIPTION
GENERAL JOURNAL
DEBIT
GENERAL JOURNAL
CREDIT
EXERCISE 19.10 (continued)
(1)
PAGE
POST.
REF.
1 2013 1
2 Dec. 31 Building 95 0 0 0 00 2
(2)
New Capital Account Balances
EXERCISE 19.11
PAGE
POST.
REF.
1 2013 James Walker, Capital 100 0 0 0 00 1
EXERCISE 19.12
The increase in net assets as a result of the revaluation is $31,000
Masten’s capital account balance before revaluation:
$110,000
DATE DEBIT CREDIT
GENERAL JOURNAL
GENERAL JOURNAL
DESCRIPTION
DESCRIPTIONDATE DEBIT CREDIT
Johnson Wilner
PROBLEM 19.1A
PAGE
POST.
REF.
1 2013 1
12 1 Cash 42320000 12
13 Reginald Pittman, Capital 423200 00 13
14 14
15 Pittman in Contemporary Computing 15
Cash 46320000
Accounts Receivable 11600000
Re
g
inald Pittman, Ca
p
ital 42320000
Total Partners’ E
q
uit
y
95220000
GENERAL JOURNA
L
DATE ACCOUNTS DEBIT CREDIT
To record investment of Reginald
Balance Sheet
January 1, 2013
Assets
Contemporary Computing
PROBLEM 19.2A
PAGE
POST.
REF.
1 2014 1
12 Camille Willis, Capital 74450 00 12
13 To record investment by Willis 13
Cash 7820000
Accounts Receivable 1490000
Partners’ Equity
James Bryant, Capital 7445000
Camille Willis, Capital 7445000
Balance Sheet
January 1, 2014
Assets
Bryant and Willis Angler’s Outpost
GENERAL JOURNAL
DATE DESCRIPTION DEBIT CREDIT
PROBLEM 19.3A
PAGE
POST.
REF.
1 2013 1
2 Dec. 31 Income Summary 14000000 2
12 Ashlee Williams, Drawing 42000 00 12
13 To close drawing account 13
14 14
15 31 Angie Castillo, Capital 2400000 15
16 Ashlee Williams, Capital 1600000 16
27 27
28 28
29 29
30 30
31 31
GENERAL JOURNAL
DATE DESCRIPTION DEBIT CREDIT
PROBLEM 19.4A
PAGE
POST.
REF.
1 2013 1
12 31 Income Summary 7600000 12
13 Larry Sims, Capital 40 0 0 0 00 13
14 Larry Thomas, Capital 36000 00 14
15 Interest allowances for year 15
16 16
17 31 Income Summary 7400000 17
25 To close drawing account 25
26 26
27 31 Larry Thomas, Capital 8000000 27
28 Larry Thomas, Drawing 8000000 28
29 To close drawing account 29
30 30
31 31
GENERAL JOURNAL
DATE DESCRIPTION DEBIT CREDIT
PROBLEM 19.4A (continued)
Net Income for Year 32000000
Distribution of Net Income
Capital Balances, January 1, 2013 40000000 36000000 76000000
Net Income 15960000 16040000 32000000
Larry’s Antiques
Statement of Partners’ Equities
Year Ended December 31, 2013
Larry Sims Larry Thomas Total
Larry’s Antiques
Income Statement
Year Ended December 31, 2013
Larry Sims Larry Thomas Total
PROBLEM 19.5A
PAGE
POST.
REF.
12013 1
12 31 Cash 12000000 12
13 Kathryn Thomas, Capital 12000000 13
14 To record investment by K. Thomas 14
15 15
16 31 Cash 12000000 16
27 Kathryn Thomas, Capital 12000000 27
28 To record investment by K. Thomas 28
29 29
30 31 Larry Thomas, Capital 1820000 30
31 Hazel Thomas, Capital 910000 31
GENERAL JOURNAL
DATE ACCOUNTS DEBIT CREDIT
PROBLEM 19.5A (continued)
PAGE
POST.
REF.
1 2013 1
12 her withdrawal from the partnership and 12
13 bonus to remaining partners 13
14 14
15 31 Hazel Thomas, Capital 77 3 0 0 00 15
16 Larry Thomas, Capital 640000 16
27 27
28 28
29 29
30 30
31 31
CREDIT
14GENERAL JOURNAL
DATE DESCRIPTION DEBIT
PROBLEM 19.6A
PAGE
POST.
REF.
12013 1
12 1 Cash 120 0 0 0 00 12
13 June Cho, Capital 120 0 0 0 00 13
14 Cash investment by Cho for 25% interest 14
15 15
16 1 June Cho, Capital 10 0 0 0 00 16
27 June Cho, Capital 920000 27
28 Bonus to new partner 28
29 29
30 30
31 31
CREDIT
GENERAL JOURNAL
DATE ACCOUNTS DEBIT
PROBLEM 19.1B
PAGE
POST.
REF.
1 2014 1
12 Carolyn Brown, Capital 9660000 12
13 To record investment by Brown 13
Cash 10900000
Accounts Receivable 1200000
Allowance for Doubtful Accounts 720000 480000
Merchandise Inventory 9200000
Furniture and Fixtures 8800000
Balance Sheet
January 1, 2014
Assets
Brock-Brown Broadcast Company
GENERAL JOURNAL
DATE ACCOUNTS DEBIT CREDIT