At the end of its first year of operations on December 31, 2014, NBS Company€™s accounts show the following.

The capital balance represents each partner€™s initial capital investment. Therefore, net income or net loss for 2014 has not been closed to the partners€™ capital accounts.

Instructions
(a) Journalize the entry to record the division of net income for the year 2014 under each of the following independent assumptions.
(1) Net income is $30,000. Income is shared 6:3:1.
(2) Net income is $40,000. Niensted and Bolen are given salary allowances of $15,000 and $10,000, respectively. The remainder is shared equally.
(3) Net income is $19,000. Each partner is allowed interest of 10% on beginning capital balances. Niensted is given a $15,000 salary allowance. The remainder is shared equally.
(b) Prepare a schedule showing the division of net income under assumption (3) above.
(c) Prepare a partners€™ capital statement for the year under assumption (3)above.

Transcribed Image Text:

Drawings Capital Art Niensted $23,000 $48,000 30,000 25,000 Partner Greg Bolen Krista Sayler 14,000 10,000