Question

This accounting course is really hard to understand please help with this there is the same question posted on here but she changed the gains and losses and I don't understand where that is calculated in. Please help!

Partnership A, B, and C is a law firm. You have been engaged as accountant to prepare financial statements for the year ended December 31, 2019 .

The partnership's trial balance is shown on the "2019 Tr. Bal." page (see tab below). 'Salary expenses' listed on the trial balance are each partners' withdrawals for the year.

Partnership profits are allocated based first on salaries, then on interest on opening capital balances, then on a fixed ratio.

Salary allocation amounts are:

Required

1 Prepare year-end adjusting entries. No descriptions are necessary.

2 Allocate partnership profit or loss to each partner. Prepare the necessary adjusting entry.

3 Post the adjusting entries and complete the trial balance.

4 Prepare an income statement and statement of partners' capital for the year ended December 31, 2019 and a balance sheet at December 31 .

Answer 1

1	Year-end Adjusting entries
		Debit	Credit
	Salary A/c
	Partner -A	$        100,000
	Partner -B	$        100,000
	Partner -C	$        160,000
	Interest On capital A/c
	Partner -A	$             3,500
	Partner -B	$             3,000
	Partner -C	$             3,500
	Profit and Loss Adjustment A/C		$     370,000

2	Allocating profit or loss to each partner on the basis of Fixed Ratio
	Fixed Ratio
	Partner -A	2
	Partner -B	3
	Partner -C	5
	Adjusting Entries
		Debit	Credit
	Profit and Loss Adjustment A/C	$        370,000
	Partner -A      A/c		$    74,000.0
	Partner -B      A/c		$ 111,000.0
	Partner -C      A/c		$ 185,000.0

3	Trial Balance	Debit	Credit
	Salary A/c	$        360,000
	Interest On capital A/c	$          10,000
	Loss on partners Capital		$     370,000

4	Income Statement
	Salary A/c	$        360,000
	Interest On capital A/c	$          10,000
	Profit and Loss Adjustment A/c		$     370,000
	Statement of Partners Capital
		Partner
		A	B	C
	Opening Capital	$          70,000	$        60,000	$          70,000
	ADD:Interest on Capital	$             3,500	$          3,000	$             3,500
	Less:Profit And Loss Adjustment	$          74,000	$     111,000	$        185,000
	Partners Closing Balance	$              (500)	$     (48,000)	$      (111,500)
	Balance Sheet as At December 31, 2019
	Partners Capital Ac
	Partner -A	$          70,000
	Partner -B	$          60,000
	Partner -C	$          70,000
	Interest On capital	$          10,000	$     210,000