Partnership Accounting: Profit Sharing, Capital Accounts, Admission & Dissolution

What you'll build

What you will be able to do

Each lab ends with a concrete result that you build yourself and the checker confirms, cell by cell.

• Roll forward the three capital accounts of Lindqvist, Okafor & Reyes Architects for 2026, work out each partner’s share of total equity and close the drawing accounts.
• Turn the agreed ratio 5 : 3 : 2 into percentages, share the 2025 profit and a possible loss, and close the Income Summary to the three capital accounts.
• Share the 2026 net income of 150,000 under the new agreement: salary allowances, 8 % interest on average capital, and a remainder that turns out negative.
• Compare two ways Dev Diaz can join the firm on 1 Jan 2027: buying half of Reyes’s interest, or investing 120,000 cash for a 20 % interest with a bonus to the old partners.
• Record the same admission of Diaz with the goodwill method, compare the two methods side by side and price a bonus that goes to the new partner.
• Okafor retires on 1 Jan 2029. You price two buy-out offers: one above his capital (a bonus to Okafor) and one below it (a bonus to the remaining partners).
• In an alternative ending the three partners wind the firm up at 31 Dec 2027. You share the loss on selling the assets, let Lindqvist and Okafor absorb Reyes’s capital deficiency and work out the final cash each partner receives.
• Book Diaz’s admission (bonus method) and the full liquidation from Lab 7 as simple debit/credit pairs, then chart the partners’ capital before and after the admission.