The capital accounts of Angel Alvarez and Emma Allison have balances of $47,000 and $73,000, respectively, on January 1, 2014

The capital accounts of Angel Alvarez and Emma Allison have balances of $47,000 and $73,000, respectively, on January 1, 2014, the beginning of the current fiscal year. On March 10, Alvarez invested an additional $8,000. During the year, Alvarez and Allison withdrew $32,000 and $39,000, respectively, and net income for the year was $62,000. The articles of partnership make no reference to the division of net income.

a. Journalize the entries to close (1) the income summary account and (2) the drawing accounts.
b. Prepare a statement of partnership equity for the current year for the partnership of Alvarez and Allison.


Answer:


























a. (1) Income Summary 62,000
Angel Alvarez, Capital 31,000
Emma Allison, Capital 31,000
(2) Angel Alvarez, Capital 32,000
Emma Allison, Capital 39,000
Angel Alvarez, Drawing 32,000
Emma Allison, Drawing 39,000

b. ALVAREZ AND ALLISON
Statement of Partnership Equity
For the Year Ended December 31, 2014
Angel
Alvarez
Emma
Allison Total
Capital, January 1, 2014 $47,000 $ 73,000 $120,000
Additional investment during the year 8,000 — 8,000
$55,000 $ 73,000 $128,000
Net income for the year 31,000 31,000 62,000
$86,000 $104,000 $190,000
Withdrawals during the year 32,000 39,000 71,000
Capital, December 31, 2014 $54,000 $ 65,000 $119,000