Question

McGill and Smyth have capital balances on January 1 of $60,000 and $48,000, respectively. The partnership income-sharing agreement provides for (1) annual salaries of $16,000 for McGill and $20,000 for Smyth, (2) interest at 10% on beginning capital balances, and (3) remaining income or loss to be shared 60% by McGill and 40% by Smyth. McGill and Smyth have capital balances on January 1 of $60,000 and $48,000, respectively. The partnership income-sharing agreement provides for (1) annual salaries of $16,000 for McGill and $20,000 for Smyth, (2) interest at 10% on beginning capital balances, and (3) remaining income or loss to be shared 60% by McGill and 40% by Smyth. (a) Your answer is correct. (1) Prepare a schedule showing the distribution of net income, assuming net income is $67,000. (If an amount reduces the account balance then enter with a negative sign preceding the number or parenthesis, e.g. -15,000, (15,000).) DIVISION OF NET INCOME McGill Smyth Total Salary allowance s 16000 $ 20000 s 36000 Interest allowance T 6000 4800 10800 Total salaries and interest 22000 24800 46800 Remaining income / deficiency 12120 8080 20200 Total division of net income 34120 34120 32880 32880 1 67000

Please fill out the incorrect chart.

Answer 1

Journal entry

No	General Journal	Debit	Credit
1	Income summary	67000
	McGill's capital		34120
	Smyth's capital		32880
2	Income summary	24000
	McGill's capital		8320
	Smyth's capital		15680