Question

BE12.5 (LO 3) AP Rod and Dall are partners in R&D LLP. The partnership reports profit of $75,000. There is no partnership agreement. (a) Prepare the entry to distribute the profit between the partners. (b) Prepare the entry to distribute the profit assuming it is a $75,000 net loss.

Journalize the division of profit.

BE12.9 (LO 3) AP Togna Company had a $15,300 loss for the year ended October 31, 2021. The company is a partnership owned by Lilia and Terry Tognazzini. Salary allowances for the partners are Lilia $24,900 and Terry $15,000. Interest allowances are Lilia $5,300 and Terry $9,300. The remainder is shared 75% by Lilia and 25% by Terry. (a) Calculate the loss to be allocated to each partner. (b) Prepare a journal entry to close the Income Summary account.

Calculate and record division of loss.

Answer 1

Answers

• BE 12.5
  >Where there is no agreement, the Net Income (loss) is distributed equally among partners.

	Accounts title	Debit	Credit
[a]	Income Summary	$75,000
	Rod, Capital ($ 75000 x 50%)		$37,500
	Dall, Capital ($ 75000 x 50%)		$37,500
	(to distribute profits)
[b]	Rod, Capital ($ 75000 x 50%)	$37,500
	Dall, Capital ($ 75000 x 50%)	$37,500
	Income Summary		$75,000
	(to distribute loss)

• BE 12.9

[a]

			Net Income (loss)
	Lilia, Capital	Terry, Capital	Net Income distributed	Undistrubuted Net Income balance (loss)
Balance				($15,300)
Salary Allowance	$24,900	$15,000	$39,900	($55,200)
Interest on capital	$5,300	$9,300	$14,600	($69,800)
Remainder Net Loss (75% and 25%)	($52,350)	($17,450)	($69,800)	$0
Total Net Income (Loss) distributed	($22,150)	$6,850

	Accounts title	Debit	Credit
[b]	Lilia Capital	$22,150
	Terry, Capital		$6,850
	Income Summary		$15,300
	(to distribute loss)