Problem: January 1, 2016 - Manning decides to leave the partnership. McNabb agrees to pay Manning $73 000 in a private transaction for his entire share in the business. The result is that all of Manning's equity will be transferred to McNabb. The income or loss will now be divided equally (50-50) between Brady and McNabb. There will be no salary.
December 31, 2016 - The business recorded a net loss of $46 000. There were no drawings. Show the entry to allocate the net income to the partners' capital accounts. Create a Statement of Partners' Equity for 2016.
Assignment Requirement:
Q1) Prepare the entry to record the departure of Manning.
Q2) Record the entry to allocate the net income to the partners' capital accounts.
Q3) Create the Statement of Partners' Equity for 2016.
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