After closing the revenue and expense accounts, the profit for the year ending December 31, 2017 of
Question:
After closing the revenue and expense accounts, the profit for the year ending December 31, 2017 of the Mo & Molly partnership is $129,000. The partnership agreement specifies that profits and losses will be shared using the following formula.
1. Allocate salary allowances of $24,000 to Mo and $30,000 to Molly.
2. Remaining profit (loss) is to be shared on a ratio of 2:1.
At the beginning of the year, Mo’s capital account had a balance of $45,000 and Molly’s capital account had a balance of $26,000. Mo withdrew $1,400 cash per month while Molly withdrew $2,800 per month from the partnership.
Prepare a schedule to show how the profit will be allocated to the two partners.
Prepare a statement of partners’ equity for the year.
Financial Accounting An Integrated Statements Approach
ISBN: 978-0324312119
2nd Edition
Authors: Jonathan E. Duchac, James M. Reeve, Carl S. Warren