In: Accounting
Daisey Brodsky and Jim Leigh began a partnership on February 1,
2021, by investing $56,000 and $82,000, respectively. They agree to
share profit and losses by allocating yearly salary allowances of
$61,000 to Daisey and $39,100 to Jim, an interest allowance of 10%
on their investments, and to split the remainder 55:45. During the
year, Daisey withdrew $32,900 and Jim withdrew $23,800. The
partnership recorded a loss of $15,400 in its first fiscal
year.
Prepare a schedule showing the division of the loss for the
year. (Enter negative amounts using either a negative
sign preceding the number e.g. -45 or parentheses e.g.
(45).)
BRODSKY AND LEIGH |
|||||||||
D. Brodsky | J. Leigh | Total | |||||||
Loss | $ | ||||||||
Salary allowance | |||||||||
D. Brodsky | $ | ||||||||
J. Leigh | $ | ||||||||
Total | |||||||||
Deficiency remaining for allocation | |||||||||
Interest allowance | |||||||||
D. Brodsky | |||||||||
J. Leigh | |||||||||
Total | |||||||||
Deficiency remaining for allocation | |||||||||
Fixed ratio | |||||||||
D. Brodsky | |||||||||
J. Leigh | |||||||||
Total | |||||||||
Loss remaining for allocation | |||||||||
Loss allocated to the partners | $ | $ | $ |
Prepare the journal entry to close the Income Summary account at
the end of the year. (Credit account titles are
automatically indented when the amount is entered. Do not indent
manually.)
Account Titles and Explanation |
Debit |
Credit |
(To close Income Summary.) |
Note: In any discrepancy, please comment. It may be due to amount entered as negatives.
BRODSKY AND LEIGH |
|||
Division of Loss |
|||
D. Brodsky |
J. Leigh |
Total |
|
Loss |
($15,400) |
||
Salary allowance |
|||
D. Brodsky |
$61,000 |
$61,000 |
|
J. Leigh |
$39,100 |
$39,100 |
|
Total |
$61,000 |
$39,100 |
$100,100 |
Deficiency remaining for allocation |
($115,500) |
||
Interest allowance |
|||
D. Brodsky |
$5,600 |
$5,600 |
|
J. Leigh |
$8,200 |
$8,200 |
|
Total |
$5,600 |
$8,200 |
$13,800 |
Deficiency remaining for allocation |
($129,300) |
||
Fixed ratio |
|||
D. Brodsky |
($71,115) |
($71,115) |
|
J. Leigh |
($58,185) |
($58,185) |
|
Total |
($71,115) |
($58,185) |
($129,300) |
Loss remaining for allocation |
$0 |
||
Loss allocated to the partners |
($4,515) |
($10,885) |
($15,400) |
Accounts title |
Debit |
Credit |
Credit |
D. Brodsky, Capital |
$4,515 |
||
J. Leigh, Capital |
$10,885 |
||
Income Summary |
$15,400 |
$14,000 |
|
(closing of income summary) |