Question

Allocation of Income for Partners. Determine each partner's share and make the appropriate general journal entry to close the Income Summary account to the capital accounts. Khalid, Dina, and James are partners with beginning-year capital balances of $400,000, $320,000, and $160,000, respectively. The partners agreed to share income and loss as follows: Salary of $30,000 to Khalid, $50,000 to Dina, and $55,000 to James. An interest allowance of 10% on beginning-of-the year capital balances. Any remaining balance is to be divided equally. The partnership net income for the year is $190,000. Admission of a Partner. Prepare the general journal entry to record the admission of Lepley to the partnership. Conley and Liu allow Lepley to purchase a 25% interest in their partnership for $50,000 cash. Conley and Liu both have capital balances of $55.000 each, and have agreed to share income and losses equally.

Answer 1

1. the Each Ppartner's Share Khalid Dina James Income Salaries allowance $ 30000 $ 50.00 $ 55.000 Interest at 10% 40000 32000 16000 Remaining Balance allocated (11000) (11ooo) Total $59000 $ 71000 L $60ooo Allocated $190000 (135000) (88000) $(33000) 33000 1 $0 (1000)