Partnership accounting

A partnership is a legal entity formed by two or more people who agree to share the profits and losses of a business. Partnership accounting is the process of recording and reporting the financial transactions of a partnership. The key aspects of partnership accounting are the formation of the partnership, the sharing of profits and losses, the payment of bonuses, the withdrawal of capital by partners, and the dissolution of the partnership. For this week’s assignment, we will focus on recording the journal entries for the key aspects of partnership accounting. This will include journal entries for the formation of the partnership, the sharing of profits and losses, the payment of bonuses, and the withdrawal of capital by partners. Please prepare a submission for the following transaction in the template provided. Year 1 On January 1, Riya and Syed entered a partnership of textile exports and imports. They agreed to distribute profits and losses in a ratio of 3:2. They contributed the following assets to the partnership: Riya contributed $45,000 in cash. Syed contributed equipment valued at $25,000. On 31 December they earned a profit net income of $100,000 Year 2 On July 22, Ken joined the partnership with a bonus. Ken invested $20,000 in cash. The profit or loss agreement will be 3:2:1 once Ken is admitted. On 31 December they earned a profit of $150,000 Year 3 On February 14, Sam was admitted to the partnership without a bonus. Partner Sam contributed $20,000 in cash. The profit or loss agreement will be 3:2:1:1 once Sam is admitted. On 31 December they earned a profit of $175,000 After two years, on March 1, Riya decided to retire. The remaining partnership agreed to settle Riya’s capital account on the basis of their revised profit and loss ratio of 2:2:1. On 31 December the firm earned a profit of $165,000 Based on the given transaction, complete the following tasks: Journalize the transaction. Compute the distribution of profit and loss of the partners. Calculate the bonus. Calculate the contribution of partners toward the withdrawal.