Jobs, Alford, and Norris formed the JAN Partnership by making capital contributions of $150,000, $100,000, and $250,000, respectively on January 7, 2014. They anticipate annual net incomes of $240,000 and are considering the following alternative plans of sharing net incomes and losses: a. Equally; b. In the ratio of their initial investments (do not round the ratio calculations); or c. Salary allowances of $70,000 to Jobs, $40,000 to Alford, and $90,000 to Norris; interest allowances of 10% on initial investments, with any remaining balance shared equally.
Required 1. Prepare a schedule with the following column headings:
Use the schedule to show how a net income of $240,000 would be distributed under each of the alternative plans being considered. Round your answers to the nearest whole dollar. 2. Prepare a statement of changes in equity showing the allocation of income to the partners, assuming they agree to use alternative (c) and the net income actually earned for the year ended December 31, 2014, is $240,000. During 2014, Jobs, Alford, and Norris withdrew $50,000, $40,000, and $60,000, respectively. 3. Prepare the December 31, 2014, journal entry to close Income Summary, assuming they agree to use alternative (c) and the net income is $240,000. Also, close the withdrawalsaccounts.