Jenkins, Willis, and Trent invested $208,000, $364,000, and $468,000, respectively, in a partnership. During its first year, the firm recorded profit of $612,000. Required: Prepare entries to close the firm’s Income Summary account as of December 31 and to allocate the profit to the partners under each of the following assumptions: a. The partners did not produce any special agreement on the method of distributing profits. Record to close income summary account. b. The partners agreed to share profit and losses in the ratio of their beginning investments. Record to close income summary account. c. The partners agreed to share profit by providing annual salary allowances of $112,000 to Jenkins, $122,000 to Willis, and $57,000 to Trent; allowing 15% interest on the partners’ beginning investments; and sharing the remainder equally. Record to close income summary account.
Jenkins, Willis, and Trent invested $208,000, $364,000, and $468,000, respectively, in a partnership. During its first year, the firm recorded profit of $612,000. Required: Prepare entries to close the firm’s Income Summary account as of December 31 and to allocate the profit to the partners under each of the following assumptions: a. The partners did not produce any special agreement on the method of distributing profits. Record to close income summary account. b. The partners agreed to share profit and losses in the ratio of their beginning investments. Record to close income summary account. c. The partners agreed to share profit by providing annual salary allowances of $112,000 to Jenkins, $122,000 to Willis, and $57,000 to Trent; allowing 15% interest on the partners’ beginning investments; and sharing the remainder equally. Record to close income summary account.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Jenkins, Willis, and Trent invested $208,000, $364,000, and $468,000, respectively, in a
Required:
Prepare entries to close the firm’s Income Summary account as of December 31 and to allocate the profit to the partners under each of the following assumptions:
a. The partners did not produce any special agreement on the method of distributing profits.
Record to close income summary account.
b. The partners agreed to share profit and losses in the ratio of their beginning investments.
Record to close income summary account.
c. The partners agreed to share profit by providing annual salary allowances of $112,000 to Jenkins, $122,000 to Willis, and $57,000 to Trent; allowing 15% interest on the partners’ beginning investments; and sharing the remainder equally.
Record to close income summary account.
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