Question

Coburn (beginning capital, $59,000) and Webb (beginning capital $95,000) are partners. During 2022, the partnership earned net income of $68,000, and Coburn made drawings of $17,000 while Webb made drawings of $25,000.

Assume the partnership income-sharing agreement calls for income to be divided 40% to Coburn and 60% to Webb. Prepare the journal entry to record the allocation of net income. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation	Debit	Credit
select an account title                                                                       Income SummaryCashDepreciation ExpenseWebb, DrawingsInventoryAccumulated Depreciation - EquipmentAllowance for Doubtful AccountsNet (Loss) IncomeCoburn, DrawingsSalaries ExpenseEquipmentCoburn, CapitalNotes PayableGain on RealizationAccounts ReceivableLoss on RealizationWebb, CapitalAccounts Payable	enter a debit amount	enter a credit amount
select an account title                                                                       Salaries ExpenseAccounts PayableGain on RealizationWebb, DrawingsCoburn, CapitalNotes PayableDepreciation ExpenseNet (Loss) IncomeAllowance for Doubtful AccountsCoburn, DrawingsLoss on RealizationIncome SummaryAccumulated Depreciation - EquipmentCashWebb, CapitalEquipmentAccounts ReceivableInventory	enter a debit amount	enter a credit amount
select an account title                                                                       Gain on RealizationCashSalaries ExpenseAccumulated Depreciation - EquipmentNet (Loss) IncomeCoburn, DrawingsNotes PayableWebb, DrawingsInventoryAccounts ReceivableLoss on RealizationCoburn, CapitalEquipmentAllowance for Doubtful AccountsWebb, CapitalIncome SummaryDepreciation ExpenseAccounts Payable	enter a debit amount	enter a credit amount

eTextbook and Media

Assume the partnership income-sharing agreement calls for income to be divided with a salary of $34,000 to Coburn and $26,000 to Webb, with the remainder divided 40% to Coburn and 60% to Webb. Prepare the journal entry to record the allocation of net income. 

Account Titles and Explanation	Debit	Credit
select an account title                                                                       Allowance for Doubtful AccountsInventoryEquipmentAccounts PayableCoburn, CapitalIncome SummaryWebb, DrawingsNotes PayableSalaries ExpenseGain on RealizationLoss on RealizationCashNet (Loss) IncomeCoburn, DrawingsAccounts ReceivableAccumulated Depreciation - EquipmentDepreciation ExpenseWebb, Capital	enter a debit amount	enter a credit amount
select an account title                                                                       Notes PayableWebb, CapitalGain on RealizationCoburn, DrawingsAccounts ReceivableEquipmentLoss on RealizationDepreciation ExpenseAllowance for Doubtful AccountsAccumulated Depreciation - EquipmentCoburn, CapitalSalaries ExpenseCashWebb, DrawingsAccounts PayableNet (Loss) IncomeIncome SummaryInventory	enter a debit amount	enter a credit amount
select an account title                                                                       Webb, CapitalSalaries ExpenseNotes PayableLoss on RealizationIncome SummaryEquipmentDepreciation ExpenseCoburn, DrawingsNet (Loss) IncomeCashGain on RealizationInventoryAccounts ReceivableAllowance for Doubtful AccountsAccumulated Depreciation - EquipmentAccounts PayableCoburn, CapitalWebb, Drawings	enter a debit amount	enter a credit amount

eTextbook and Media

Assume the partnership income-sharing agreement calls for income to be divided with a salary of $38,000 to Coburn and $33,000 to Webb, interest of 11% on beginning capital, and the remainder divided 50%–50%. Prepare the journal entry to record the allocation of net income. 

Account Titles and Explanation	Debit	Credit
select an account title                                                                       Notes PayableLoss on RealizationNet (Loss) IncomeIncome SummarySalaries ExpenseAllowance for Doubtful AccountsInventoryAccounts PayableCoburn, CapitalEquipmentGain on RealizationCashDepreciation ExpenseCoburn, DrawingsWebb, CapitalAccumulated Depreciation - EquipmentWebb, DrawingsAccounts Receivable	enter a debit amount	enter a credit amount
select an account title                                                                       Coburn, CapitalAllowance for Doubtful AccountsCashLoss on RealizationDepreciation ExpenseNet (Loss) IncomeWebb, DrawingsIncome SummaryEquipmentNotes PayableAccumulated Depreciation - EquipmentSalaries ExpenseGain on RealizationWebb, CapitalAccounts ReceivableInventoryAccounts PayableCoburn, Drawings	enter a debit amount	enter a credit amount
select an account title                                                                       Depreciation ExpenseWebb, DrawingsInventoryCashAccounts ReceivableCoburn, CapitalLoss on RealizationAllowance for Doubtful AccountsEquipmentNotes PayableAccumulated Depreciation - EquipmentIncome SummaryAccounts PayableGain on RealizationSalaries ExpenseWebb, CapitalNet (Loss) IncomeCoburn, Drawings	enter a debit amount	enter a credit amount

eTextbook and Media

Compute the partners’ ending capital balances under the assumption in part (c) above.

		Ending capital
Coburn		$enter a dollar amount
Webb		$enter a dollar amount

Answer 1

Net income earned = 71000

Profit sharing ratio of coburn & webb = 30:70

Share of coburn in profit = 71000*30% i.e 21300

Share in profit of webb = 71000*70% i.e 49700

Journal entry to allocate profit among the partners

Profit and loss A/c ..............Dr 71000

To coburn capital a/c 21300

To webb capital a/c 49700

( Being amount allocated in the ratio 30:70)