Question

In: Accounting

Daisey Brodsky and Jim Leigh began a partnership on February 1, 2021, by investing $56,000 and...

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
Division of Loss

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.)

Solutions

Expert Solution

  • Requirement [a]

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)

  • Journal entry

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)


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