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Penny, Quinn and Randy formed a partnership business called 3D Graphics Company. Their investments to the partnership were $80,000, $50,000, and $30,000 respectively. In addition,
Penny, Quinn and Randy formed a partnership business called 3D Graphics Company. Their investments to the partnership were $80,000, $50,000, and $30,000 respectively. In addition, they agreed to share profits as follows:
- The first $40,000 to be allocated on the basis of their original capital investments to the partnership.
- The next $50,000 to be allocated on the basis of their service performed, with Penny drawing $30,000 and Randy drawing $20,000.
- The remaining is to be allocated on the ratio of 5:3:2 respectively.
Required:
- If the business earned a profit of $65,000 during the year, show the share of profit to each partner.
- Journalize the distribution of profit to the partners capital account.
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