Question

Journalize the entry to record the division of net income for the year 2018 under each of the following independent assumptions

At the end of its first year of operations on December 31, 2018, NBS Company's accounts show the following. Partner Art Niensted Greg Bolen Krista Sayler Drawings $22,900 13,600 10,800 Capital $49,000 34,000 23,500 The capital balance represents each partner's initial capital investment. Therefore, net income or net loss for 2018 has not been closed to the partners' capital accounts.

(a)

1. (1) Net income is $28,300. Income is shared 6 : 3 : 1.

2. (2) Net income is $39,600. Niensted and Bolen are given salary allowances of $15,200 and

   $10,300, respectively. The remainder is shared equally.

3. (3) Net income is $18,900. Each partner is allowed interest of 10% on beginning capital

4. balances. Niensted is given a $14,250 salary allowance. The remainder is shared equally.

(b) Prepare a schedule of division of net income based upon (a) (3) above (c)

Prepare a partner’s capital statement based on (b)

Answer 1

On December 31 capital N Drawings Partner $ 49,000 c $22900 Art Niensted 34,000 13600 Greg Bolen 23,500 10800 Krista salyeo Journal entries for Independent Assumptions : (1) Net income is $28,300. Income sharing ratio 6:3:1 Credit ($) Debit (6) 28,300 Income summary Art Niensted 16980 Greg Bolen 8490 2830 Krista Salyer (for Income distributed in ratio 6:3.1) Salary Allowances 2) Bolen to Niensted and given Net Income is $39,600 Bag $15200 and $10 300 and remainder equally Income summary $39,600 Art Niensted [ $15200+ $4700) $ / 9900 ($10300 + $4700 ) $ 15000 Kriti Sayles ($ 4700) $ 4700 Grog Bolen и (Balance and shared equally $39600 - $15200 - $10300 $14100/3)

Assna 18900 17150 Income summary Art Niensted ($14250+49000 101. - 2000) Greg Bolen ($ 34000 101) - 2000) Krista Sayler ( $23500 101 ) - 200 ) 1400 350 (Balance amt shared equally $18900 - 414250 - $4900- $3400 - $ 2350 / 3 $20w Part B Schedule showing the division og Net Income under an m3) Amount in (4) Greg Bolen Art Niensted Particulars Krista saylor 14250 Salary 4900 3400 2350 Interest (101.on begg. capital balances (2000) ( 20001| (2000) Balance amount Shaved equally ($18900 - $14250-$4900-$3400 -$2350/3) 1710 350 1400

Part Pasmus's capital statement for Hu yr under Alson - Bj Particulars 49000 Partner's capital at the Beginning Drawings 34000 23500 (13600) (10800) (22900) 17150 350 1400 Share in Net Income 21800 13050 Partner's capital at end ( capital at 43,250 begm - Drawings + Share in net incom)