Mary and Nancy invested $80,000 each to form a partnership. Mary has been authorized a salary of

Question:

Mary and Nancy invested $80,000 each to form a Mary has been authorized a salary of $20,000, while Nancy’s salary is $25,000. Each partner is to receive 10% on the original capital investment. The profit and loss agreement stipulates that any remaining income or loss is to be divided equally. The had a net loss of $20,000 this year.

Required:
Prepare the journal entry to record the allocation of the net loss for the year. Show supporting computations.

Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...