Question
Part 1 Plump and Walker have formed a partnership. During their first year of operations, the partnership earned $150,000. Their-profit-and-loss-sharing agreement states that, first, each
Part 1
Plump
and
Walker
have formed a partnership. During their first year of operations, the partnership earned
$150,000.
Their-profit-and-loss-sharing agreement states that, first, each partner will receive
5%
of their capital balances. The second level is based on services, with
$15,000
to
Plump
and
$25,000
to
Walker.
The remainder then will be shared
2:3
between
Plump
and
Walker,
respectively.
Read the
requirements
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Part 1
Requirement 1. Calculate the amount of income each partner will receive under their profit-and-loss-sharing agreement assuming
Plump's
capital balance is
$98,000
and
Walker's
capital balance is
$98,000.
(Complete all answer boxes. For amounts that are $0, make sure to enter "0" in the appropriate column.)
Plump | Walker | Total | |||
Net income (loss) | |||||
Capital allocation: | |||||
Plump | |||||
Walker | |||||
Salary allowance: | |||||
Plump | |||||
Walker | |||||
Total salary and capital allocation | |||||
Net income (loss) remaining for allocation | |||||
Share of remainder: | |||||
Plump | |||||
Walker | |||||
Total allocation | |||||
Net income (loss) remaining for allocation | |||||
Net income (loss) allocated to the partners |
Part 2
Requirement 2. Journalize the entry to close the Income Summary account for the year. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.)
Date | Accounts and Explanation | Debit | Credit | ||
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