1. Ben Conway, Ida Chan, and Clair Scott formed CCS Consulting this year by making capital contributions of $245,000, $280,000, and $175,000, respectively. They anticipate annual profit of $360,000 and are considering the following alternative plans of sharing profits and losses:

1. In the ratio of their initial investments; or
2. Salary allowances of $110,000 to Conway, $85,000 to Chan, and $60,000 to Scott and interest allowances of 12% on initial investments, with any remaining balance shared equally.

Required: 1. Use the schedule to show how a profit of $360,000 would be distributed under each of the alternative plans being considered. (Enter all amounts as positive values.)

Profit (Loss) Sharing Plan	Calculations	Share to Conway	Share to Chan	Share to Scott	Total
(a)	Profit
(b)	Profit
	Salary allowances
	Interest allowances
	Total salaries and interest allocation
	Balance of Profit
	Balance allocated equally
	Balance of Profit
	Shares of partners

Prepare the December 31, 2020, journal entry to close Income Summary assuming they agree to use alternative (b) and the profit is $360,000.

	Date	General Journal	Debit	Credit
To close	Dec 31, 2020
Income Summary