If the partners in Exercise 2 share net income based on their beginning capital investments, what would be the journal entry at closing to allocate net income?
In Exercise 2, John Conway, Steve Barrett, and Mary Fitzpatrick invested $3,000, $12,600, and $14,400, respectively. At the end of the first year, the company’s net income was $48,000. Assuming no agreement was reached on how to share net income, prepare a journal entry at closing to allocate net income.