Accounting Homework Help

Posted on 2013-11-29 12:29:00 in Accounting by DEQUEZ A

Kara Ries, Tammy Bax, and Joe Thomas invested $40,000, $56,000, and $64,000, respectively, in a partnership. During its first calendar year, the firm earned $327,900.



Prepare the entry to close the firm’s Income Summary account as of its December 31 year-end and to allocate the $327,900 net income to the partners under each of the following separate assumptions.



1. The partners have no agreement on the method of sharing income and loss.



Close the income summary account assuming the partners have no agreement on the method of sharing income and loss.





2.The partners agreed to share income and loss in the ratio of their beginning capital investments



Kara: percentage of total equity x income summary and allocated income to capital

Tammy: percentage of total equity x income summary and allocated income to capital

Joe: percentage of total equity x income summary and allocated income to capital



3. The partners agreed to share income and loss by providing annual salary allowances of $30,000 to Ries, $25,000 to Bax, and $37,000 to Thomas; granting 10% interest on the partners’ beginning capital investments; and sharing the remainder equally.



Close the income summary account assuming the partners have agreed to share income and loss by providing annual salary allowances of $30,000 to Ries, $25,000 to Bax, and $37,000 to Thomas; granting 10% interest on the partners’ beginning capital investments; and sharing the remainder equally.

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