Mo Meek, Lu Ling, and Barb Beck formed the MLB Partnership by making capital contributions of $74,700, $290,500, and $464,800, respectively. They predict annual partnership net income of $492,000 and are considering the following alternative plans of sharing income and loss: (a) equally; (b) in the ratio of their initial capital investments; or (c) salary allowances of $83,200 to Mo, $62,400 to Lu, and $94,000 to Barb; interest allowances of 10% on their initial capital investments; and the balance shared as follows: 20% to Mo, 40% to Lu, and 40% to Barb.

rev: 09_28_2017_QC_CS-102797

Problem 12-4A Part 1

Required: 1. Use the table to show how to distribute net income of $492,000 for the calendar year under each of the alternative plans being considered. (Do not round intermediate calculations.)

Income (Loss) Sharing PlanPlan (a)MoLuBarbTotalNet Income (loss)$492,000Balance allocated equally0Balance of income (loss)$492,000Shares to the partners$0$0$0$0Plan (b)MoLuBarbTotalNet Income (loss)$492,000Balance allocated in proportion to initial investments0Balance of income (loss)$492,000Shares to the partners$0$0$0$0Plan (c)MoLuBarbTotalNet income (loss)$492,000Salary allowances0Balance of income (loss)Interest allowances0Balance of income (loss)Balance allocated0Balance of income (loss)$0Shares of the partners$0$0$0$0

Prepare a statement of partners equity showing the allocation of income to the partners assuming they agree to use plan (c), that income earned is $492,000, and that Mo, Lu, and Barb withdraw $38,800, $52,800, and $68,800, respectively, at year-end. (Do not round intermediate calculations. Enter all allowances as positive values. Enter losses as negative values.)

MLB PARTNERSHIP
Statement of Partners' Equity
For Year Ended December 31
	Mo	Lu	Barb	Total
Initial partnership investments				0
Net income
Total net income				0
Total	0	0	0	0
				0
	$0	$0	$0	$0

Prepare the December 31 journal entry to close Income Summary assuming they agree to use plan (c) and that net income is $492,000. Mo, Lu, and Barb withdraw $38,800, $52,800, and $68,800, respectively, at year-end. Also close the withdrawals accounts.

Journal entry worksheet

Record the entry to close the income summary account assuming the partners agree to use plan(c) and net income is $222,600.

Note: Enter debits before credits.

Date	General Journal	Debit	Credit
Dec 31

Journal entry worksheet

Record the entry to close the partners' withdrawals accounts. (Mo, Lu, and Barb withdraw $38,800, $52,800, and $68,800, respectively, at year-end.)

Note: Enter debits before credits.

Date	General Journal	Debit	Credit
Dec 31