Question

The partnership of A. C. Taylor, R. M. Thomas, and D. T. Hernandez has a net income of $ 175,300 for this year. The balances in the partners’ Capital accounts at the beginning of the year were $ 46,000, $ 51,500, and $ 58,000, respectively. At the end of the year, the balances of the Drawing accounts are $ 25,000, $ 29,200, and $ 24,250, respectively. The partnership agreement stipulates salary allowances as follows: Taylor, $ 44,500; Thomas, $ 47,500; Hernandez, $ 48,400. It also allows 10 percent interest on the balances of the partners’ Capital accounts at the beginning of the year. The remainder of the net income, after salary and interest allowances, is divided equally.

Required
1. Prepare the section of the income statement for the current year that deals with the division of net income.
2. Prepare entries to close the firm’s Income Summary and Drawing accounts on December 31.
3. Assuming a net income of $ 109,000, prepare the section of the income statement that deals with division of net income.



$1.99
Sales1
Views85
Comments0
  • CreatedOctober 21, 2014
  • Files Included
Post your question
5000