Use the information supplied in PE 11-3 for Brandon Smithson and Lakendra Mooney but assume that the partnership had net income of $61,000 for the year instead of net income of $240,000.
How much net income should be distributed to Mooney? Prepare the journal entry to close the income summary account.
In PE 11-3
Brandon Smithson and Lakendra Mooney formed a partnership, dividing income as follows: 1. Annual salary allowance to Mooney of $53,000. 2. Interest of 5% on each partner's capital balance on January 1. 3. Any remaining net income will be shared by Smithson and Mooney in a 3:1 ratio.
Smithson and Mooney had $50,000 and $150,000, respectively, in their January 1 capital balances. Net income for the year was $240,000.