Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Ben Conway, Ida Chan, and Clair Scott formed CCS Consulting this year by making capital contributions of $270,000, $306,000, and $200,000, respectively. They anticipate
Ben Conway, Ida Chan, and Clair Scott formed CCS Consulting this year by making capital contributions of $270,000, $306,000, and $200,000, respectively. They anticipate annual profit of $465,600 and are considering the following alternative plans of sharing profits and losses: a. Equally. b. In the ratio of their initial investments; or c. Salary allowances of $124,000 to Conway, $98,000 to Chan, and $73,000 to Scott and interest allowances of 10% on initial investments, with any remaining balance shared equally. Required: 1. Use the schedule to show how a profit of $465.600 would be distributed under each of the alternative plans being considered (Enter all amounts as positive values.) Save & Profit (Loss) Calculations Sharing Plan (a) Profit (b) Profit (c) Profit Salary allowances Interest allowances Total salaries and interest allocation Balance of Profit Balance allocated equally Balance of Profit Shares of partners Share to Conway Share to Chan Share to Scott Total $ 465.600 2. Prepare a statement of changes in equity showing the allocation of profit to the partners, assuming they agree to use alternative (c) and the profit actually earned for the year ended December 31, 2023, is $465,600. During the year, Conway, Chan, and Scott withdraw $53,000, $43,000, and $33,000, respectively. (Enter all amounts as positive values.) CCS Consulting Statement of Changes in Equity For Year Ended December 31, 2023 Capital, January 1 Total Capital December 311 Conway Chan Scott Total 3. Prepare the December 31, 2023, journal entry to close Income Summary assuming they agree to use alternative (c) and the profit is $465,600 Also, close the withdrawals accounts. View transaction list Journal entry worksheet 1 2 Record the entry to close income summary. Note: Enter debits before credits Date December 31 2023 General Journal Debit Credit 3. Prepare the December 31, 2023, journal entry to close Income Summary assuming they agree to use alternative (c) and the profit is $465,600. Also, close the withdrawals accounts. View transaction list Journal entry worksheet 1 2 Record the entry to close withdrawals accounts. Note: Enter debits before credits, Date December 31, 2023 General Journal Debit Credit
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started