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In: Accounting

The ABC Partnership has the following revenues and expenses for the past year: Sales $430,000 Cost...

The ABC Partnership has the following revenues and expenses for the past year:

Sales $430,000

Cost of Goods Sold 218,000

Gross Profit 212,000

Operating Expenses 142,000

Net Income $70,000

The three owners are Albert, Bob, and Clay. Their capital accounts at the beginning of the year were as follows:

Albert $30,000

Bob 20,000

Clay 50,000

Albert invested an additional $5,000 in the business on june 30th. During the year the three partners each withdrew the following amounts:

Albert $12,000

Bob 18,000

Clay 24,000

The three partners have agreed to divide profits and losses as follows:(1) Salary of $20,000 to Albert, $15,000 to Bob, and $13,000 to Clay; (2) Interest of 10% on the beginning capital balance for each partner; remainder divided in a 3:3:5 ratio.

Required: Determine the amount of profit that is allocated to each partner. Prepare the journal entry to close income summary and the withdrawal accounts. What is the ending capital balances for each partner after all temporary accounts have been closed out.

Expert Solution

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Please let me know in case you face any issue. Answer has been rounded to whole dollar. Account title working may be different as per question requirement and format provided:

ekkarill92 answered 2 years ago

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