In: Accounting
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 partners’ beginning capital investments; and sharing the remainder equally.
Answers
[1]
Supporting Calculations | Ries | Bax | Thomas | Total |
Net Income | $355,800 | |||
Salary Allowances | $32,000 | $27,000 | $39,000 | $98,000 |
Balance after Salary allowances | $257,800 | |||
Interest allowances | $5,200 | $6,800 | $7,600 | $19,600 |
Balance after interest & salaries | $238,200 | |||
Balance allocated Equally | $79,400 | $79,400 | $79,400 | $238,200 |
Balance of Income | $0 | |||
Shares of the partner | $116,600 | $113,200 | $126,000 |
[2]
Date | General Journal | Debit | Credit |
Dec-31 | Income Summary | $355,800 | |
Kara Ries, Capital | $116,600 | ||
Tammy Bax, Capital | $113,200 | ||
Joe Thomas, Capital | $126,000 | ||
( to close net income balance ) |