Item$7$

$20$

points

eBookPrintReferencesCheck my workCheck My Work button is now enabled$5$Item $7$

Ben Conway, Ida Chan, and Clair Scott formed CCS Consulting this year by making capital contributions of $$260,000,$ $$296,000,$ and $$190,000,$ respectively. They anticipate annual profit of $$447,600$ and are considering the following alternative plans of sharing profits and losses:

Equally;

In the ratio of their initial investments; or

Salary allowances of $$116,000$ to Conway, $$93,000$ to Chan, and $$68,000$ 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 $$447,600$ would be distributed under each of the alternative plans being considered. $($Enter all amounts as positive values.$)$

$2.$ 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 $$447,600.$ During the year, Conway, Chan, and Scott withdraw $$48,000,$ $$38,000,$ and $$28,000,$ respectively. $($Enter all amounts as positive values.$)$

$3.$ Prepare the December $31,2023,$ journal entry to close Income Summary assuming they agree to use alternative $($c$)$ and the profit is $$447,600.$ Also, close the withdrawals accounts.