Managerial Accounting: E13-13 Lawlor has decided to start a pressure washing business

Managerial Accounting
E13-13 Account for partner investments, allocating profits and losses to the partners
This exercise is related to the Lawlor Lawn Service situation started in Chapter 1.
Lawlor has decided to start a pressure washing business with her buddy Tanya. This will be a separate business from Lawlor Lawn Service. Lawlor and Tanya will be partners in the pressure washing business. Lawlor will contribute cash of $1,000 and a pressure washing machine that cost Lawlor $1,800 but has current market value of only $1,500. Tanya will contribute supplies of $500 and a storage building that cost $2,000 but has a current value of $2,200. They form the LT Pressure Washing Service on March 1, 2013. Lawlor and Tanya agree to shar profits and losses 4:3, respectively.

1. Journalize the investment of both partners in the LT Washing Pressure Service on 1 March 2013.
2. The partnership recorded a loss of $700 for March 2013. Journalize the allocation of the loss from the income summary account.
3. What are the balances in Lawlor's and Tanya's capital accounts on 31 March 2013? Prepare T-accounts to answer the question.
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