K. Ison (beginning capital, $50,000) and I. McCoy (beginning capital $80,000) are partners. During 2021, the partnership

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K. Ison (beginning capital, $50,000) and I. McCoy (beginning capital $80,000) are partners. During 2021, the partnership reported profit of $60,000, and Ison made drawings of $15,000 while McCoy made drawings of $20,000.


Instructions

a. Assume the partnership agreement calls for profit to be divided 55% to Ison and 45% to McCoy. Prepare the journal entry to close the Income Summary account.

b. Assume the partnership agreement calls for profit to be divided with a salary of $30,000 to K. Ison and $20,000 to I. McCoy, with the remainder divided 55% to Ison and 45% to McCoy. Prepare the journal entry to close the Income Summary account.

c. Assume the partnership agreement calls for profit to be divided with a salary of $40,000 to K. Ison and $30,000 to I. McCoy, interest of 10% on beginning capital, and the remainder divided 50%–50%. Prepare the journal entry to close the Income Summary account.

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...
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Related Book For  book-img-for-question

Accounting Principles Volume 2

ISBN: 978-1119502555

8th Canadian Edition

Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak

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