Wayne Beasley and Barney Coda operate a retail furniture store. Under the terms of the partnership agreement,

Question:

Wayne Beasley and Barney Coda operate a retail furniture store. Under the terms of the agreement, Beasley is authorized to withdraw $8,000 a month and Coda $6,000 a month. The withdrawals, which are not considered to be salaries, were made each month and charged to the drawing accounts. The partners have agreed that net income or loss is to be allocated 35 percent to Beasley and 65 percent to Coda. For the year ended December 31, 2016, the earned a net income of $420,000.
Instructions
1. Prepare general journal entries to:
a. Close the Income Summary account.
b. Close the partners' drawing accounts.
2. Assume that there had been a net loss of $220,000 instead of net income of $420,000. Prepare the general journal entries to:
a. Close the Income Summary account.
b. Close the partners' drawing accounts.
Analyze: Barney Coda's capital account on January 1, 2016, was $300,000. What is the balance in that account as the end of 2016, assuming the profit for the year was $420,000?
Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...