This problem is related to the Daniels Consulting situation started in Chapter 1.
Daniels, Tau, and Williams decide to form a graphic design partnership. Daniels figures this graphic design business will help his other company, Daniels Consulting, with any graphic design needs. Additionally, Tau and Williams have connections with many companies and can expand and grow this new partnership. Each of the three partners contributes $12,000 cash to start up the CDS partnership. They agree to share profits in two steps. First, Tau will receive $11,000 and Williams will receive$16,000 because they will do most of the graphic design work. Any remaining profits or losses will be shared 1:2:3, respectively for Daniels, Tau, and Williams. The business starts on January 1, 2017. On December 31, 2017, the business posted a loss of$12,000. Daniels decides to withdraw from the partnership on December 31, 2017. Tau and Williams agree to give Daniels $4,000 for his equity interest.
1. Journalize the contribution of the partners in the partnership on January 1, 2017.
2. Journalize the allocation of the loss from the Income Summary account.
3. Journalize the withdrawal of Daniels as a partner on December 31, 2017.
4. Calculate the ending balances in Tau and Williams’s capital accounts.