On March 1, Razul and Amy added a new partner to the business, Sheila. Sheila will contribute $84,000 and receive a 31% share of the business. Use the capital balances from January 1 to determine any bonuses. Assume the existing partners will split any bonus evenly.

Razul			Amy
Cash	$55,600		Cash		$75,800
Equipment	188,600		Furniture		88,700
Bank Loan	93,000		Accounts Payable		44,000

During the year, Razul and Amy withdrew $23,800 and $19,200 respectively and the business reported a net income of $472,000. Their partnership agreement provided for sharing of net income (loss) on the following basis:
1. Salary of $68,500 is allocated to Razul, $53,000 to Amy, and $21,600 to Sheila.  
2. Interest is allocated at 8% of each partner's opening capital balance.  
3. Remainder is shared where Razul gets 36%, Amy gets 30%, and Sheila gets 34%.

USING THE ABOVE INFORMATION :

Prepare the journal entries to record the distribution of net income and the closing of the withdrawals accounts. Assume revenues and expenses have been closed to the income summary account.

Date

Account Title and Explanation

Debit

Credit

Answer rating: 100% (QA)

Date Account Title and Explanation Debit Credit J... View the full answer