(Answered):Partnership 1 . . . .

Question Description

Two people are starting a small IT firm. They come to you for advice on how to form a partnership. They have listed 2 scenarios and are asking you how to make journal entries for each one of the following transactions:

1. Two partners, A and B, start a partnership.
   • Partner A’s investment is the following:
     • Cash: $20,000
     • Inventory: $30,000
     • Accounts payable: $50,000
     • Computer equipment: $40,000
     • Accumulated depreciation: $20,000
   • Partner B’s investment is the following:
     • Cash: $10,000
     • Computer software: $20,000
2. Two partners, Small and Big, form a partnership in which Small invested $40,000 and Big invested $60,000 for a total capital of $100,000. But Small devotes more time to the
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