Question

In: Accounting

​Ries. Bax, and Thomas invested $80,000, $112.000, and $128,000, respectively


Ries. Bax, and Thomas invested $80,000, $112.000, and $128,000, respectively, in a partnership. Dans its first calendar year, the firm earned $249,000. 


Required 

Prepare the entry to close the firm's Income Summary account as of its December 31 year-end and to locate the $249,000 net income under each of the following separate assumptions,

 1. The partners did not agree on a plan and therefore share income equally.

 2. The partners agreed to share income and loss in the ratio of their beginning capital investments,

 3. The partners agreed to share income and loss by providing annual salary allowances of 300, 0 0 Ries, $56,000 to Bax, and $80,000 to Thomas; granting 10% interest on the partners beginning capital investments, and sharing the remainder equally. 

Solutions

Expert Solution

(1) -- The partners did not agree on a plan and therefore share income equally.

Answer -

Date General Journal Debit ($) Credit ($)
December 31

Income summary

Ries, Capital [$249000/3]

Bax, Capital [$249000/3]

Thomas, Capital [$249000/3]

249000

-

-

-

-

83000

83000

83000

.

(2) -- The partners agreed to share income and loss in proportion to their initial investments.

Answer -

Date General Journal Debit ($) Credit ($)
December 31

Income summary

Ries, Capital [Refer working note]

Bax, Capital [Refer working note]

Thomas, Capital [Refer working note]

249000

-

-

-

-

62250

87150

99600

# Working note - Calculation of partners share of income -

Particulars Explanation Amount ($)
Ries share of income

(Partners' capital balance / Total partnership capital) * Net income

= [$80000 / ($80000+$112000+$128000)] * $249000

= $62250

62250
Bax's share of income

(Partners' capital balance / Total partnership capital) * Net income

= [$112000 / ($80000+$112000+$128000)] * $249000

= $87150

87150
Thomas share of income

(Partners' capital balance / Total partnership capital) * Net income

= [$128000 / ($80000+$112000+$128000)] * $249000

= $99600

99600

.

(3) -- The partners agreed to share income and loss by providing annual salary allowances of $66000 to Ries, $56000 to Bax, and $80000 to Thomas; granting 10% interest on the partners’ beginning capital investments; and sharing the remainder equally.

Answer -

Date General Journal Debit ($) Credit ($)
December 31

Income summary

Ries, Capital [Refer working note]

Bax, Capital [Refer working note]

Thomas, Capital [Refer working note]

249000

-

-

-

-

79000

72200

97800

# Working note - Calculation of partners share of income -

Particulars Explanation Ries ($) Bax ($) Thomas ($) Total ($)
I. Net income Given in question - - - 249000
II. Salary allowances Given in question 66000 56000 80000 -
III. Interest allowances Partners’ beginning capital * 10%

8000

[$80000*10%]

11200

[$112000*10%]

12800

[$128000*10%]

-
IV. Total allowances II + III 74000 67200 92800 234000
V. Balance of income I - IV - - - 15000
VI. Remainder shared equally $15000 / 3 5000 5000 5000 15000
VII. Balance of income V - VI - - - 0
Income of each partner IV + VI 79000 72200 97800 -

Related Solutions

Kara Ries, Tammy Bax, and Joe Thomas invested $80,000, $112,000, and $128,000
Problem 12-3A Allocating partnership income P2 Kara Ries, Tammy Bax, and Joe Thomas invested $80,000, $112,000, and $128,000, respectively, in a partnership. During its first calendar year, the firm earned $249,000. Required Prepare the entry to close the firm's Income Summary account as of its December 31 year-end and to allocate the $249,000 net income to the partners under each of the following separate assumptions: 1. The partners have no agreement on the method of sharing income and loss. 2. The partners agreed to share...
Ries, Bax, and Thomas invested $56,000, $72,000, and $80,000, respectively, in a partnership. During its first...
Ries, Bax, and Thomas invested $56,000, $72,000, and $80,000, respectively, in a partnership. During its first calendar year, the firm earned $367,200. Required: Prepare the entry to close the firm’s Income Summary account as of its December 31 year-end and to allocate the $367,200 net income under each of the following separate assumptions: 3. The partners agreed to share income and loss by providing annual salary allowances of $33,000 to Ries, $28,000 to Bax, and $40,000 to Thomas; granting 10%...
Ries, Bax, and Thomas invested $52,000, $68,000, and $76,000,respectively, in a partnership. During its first...
Ries, Bax, and Thomas invested $52,000, $68,000, and $76,000, respectively, in a partnership. During its first calendar year, the firm earned $355,800.Required:Prepare the entry to close the firm’s Income Summary account as of its December 31 year-end and to allocate the $355,800 net income under each of the following separate assumptions:3. The partners agreed to share income and loss by providing annual salary allowances of $32,000 to Ries, $27,000 to Bax, and $39,000 to Thomas; granting 10% interest on the...
Ries, Bax, and Thomas invested $52,000, $68,000, and $76,000,respectively, in a partnership. During its first...
Ries, Bax, and Thomas invested $52,000, $68,000, and $76,000, respectively, in a partnership. During its first calendar year, the firm earned $355,800.Required:Prepare the entry to close the firm’s Income Summary account as of its December 31 year-end and to allocate the $355,800 net income under each of the following separate assumptions:2. The partners agreed to share income and loss in the ratio of their beginning capital investments. (Do not round intermediate calculations. Round final answers to the nearest whole dollar.) 
Kara Ries, Tammy Bax, and Joe Thomas invested $42,000, $58,000, and $66,000, respectively, in a partnership....
Kara Ries, Tammy Bax, and Joe Thomas invested $42,000, $58,000, and $66,000, respectively, in a partnership. During its first calendar year, the firm earned $418,200. Prepare the entry to close the firm’s Income Summary account as of its December 31 year-end and to allocate the $418,200 net income to the partners under each of the following separate assumptions: The partners agreed to share income and loss in the ratio of their beginning capital investments. (Do not round intermediate calculations. Round...
Kim Ries, Tere Bax, and Josh Thomas invested $54,000, $70,000 and $78,000 respectively, in a partnership....
Kim Ries, Tere Bax, and Josh Thomas invested $54,000, $70,000 and $78,000 respectively, in a partnership. During its first calendar year, the firm earned $392,400. Prepare the entry to close the firm’s Income Summary account as of its December 31 year-end and to allocate the $392,400 net income to the partners under each of the following separate assumptions: (1) The partners have no agreement on the method of sharing income and loss (2) The partners agreed to share income and...
Kara Ries, Tammy Bax, and Joe Thomas invested $26,000, $42,000, and $50,000, respectively, in a partnership....
Kara Ries, Tammy Bax, and Joe Thomas invested $26,000, $42,000, and $50,000, respectively, in a partnership. During its first calendar year, the firm earned $359,700. Prepare the entry to close the firm’s Income Summary account as of its December 31 year-end and to allocate the $359,700 net income to the partners under each of the following separate assumptions:
Contribution Income Statement Sales (16,000 units) ……………………….. 128,000 Variable expenses ……………………… 80,000 Contribution Margin ………………… 48,000...
Contribution Income Statement Sales (16,000 units) ……………………….. 128,000 Variable expenses ……………………… 80,000 Contribution Margin ………………… 48,000 Fixed expenses ………………………… 12,000 Net Operating Income ………………. 36,000 Jackpot company sells a single product, has provided its contribution format income statement for June. Required: Prepare Contribution Income Statement assuming that the business expects an increase in its total sales (as revenue) by 10% and decrease in variable cost per unit by $3. (2.5 marks) Refer to the original data, how much is the...
A business sells $ 60,000 and $ 80,000 worth of goods in January and February respectively....
A business sells $ 60,000 and $ 80,000 worth of goods in January and February respectively. The controller indicates that 50% of the customers pay their bills on a cash basis, 40% in 30 days and 10% in 60 days. During the month of January and February, the company purchased 30,000 and $50,000 worth of goods from suppliers respectively. The company’s policy is to pay 50% on a cash basis and the other 50% during the following 30 days. The...
Holly and Luke formed a partnership, investing $240,000 and $80,000, respectively. Determine their participation in the...
Holly and Luke formed a partnership, investing $240,000 and $80,000, respectively. Determine their participation in the year's net income of $380,000 under each of the following independent assumptions: No agreement concerning division of net income; Divided in the ratio of original capital investment; Interest at the rate of 15% allowed on original investments and the remainder divided in the ratio of 2:3; Salary allowances of $50,000 and $70,000, respectively, and the balance divided equally; Allowance of interest at the rate...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT