The partnership of McGillivray, Gillis, and Newton had the following transactions in 2015:
Feb. 1. The partnership was formed with the following amounts invested by the partners:
McGillivray invested $10,000 cash and equipment valued at $12,000.
Gillis invested $5,000 cash and inventory with a carrying value of $16,000 and a market value of $13,000.
Newton invested $10,000.
Jun. 10. The partners invested an additional $5,000 each.
Oct. 31. Newton received a salary allowance of $25,000. (The full salary allowance for the year was not paid due to concerns about cash flow).
Dec. 31. The partnership reported net income of $33,600.a. Determine the division of income among the three partners, assuming that the part- nership agreement specifies that the partners receive 4% interest on their year-end capital balance, that Newton receives a salary allowance of $40,000, and that any remaining income or loss is shared in a ratio of 3:2:1.
b. Prepare the journal entry to close the net income and withdrawals to the individual partner equity accounts.