Problem 12-2A

At the end of its first year of operations on December 31, 2014, NBS Company's accounts show the following.

Partner	Drawing	Capital
Art Niensted	$23,000	$43,190
Greg Bolen	13,500	35,130
Krista Sayler	11,820	22,260

The capital balance represents each partner's initial capital investment. Therefore, net income or net loss for 2014 has not been closed to the partners' capital accounts.

(a) Journalize the entry to record the division of net income for the year 2014 under ech of the following independent assumptions.

(1) Net income is $31,500. Income is shared 6 : 3 : 1.

(2) Net Income is $39,880. Niensted and Bolen are given salary allowances of $14,600 and $10,460, respectively. The remainder is shared equally.

(3) Net Income is $19,820. Each partner is allowed interest of 10% on beginning capital balances. Niensted is given a $16,032 salary allowance. The reminder is share equally.

(b) Prepare a schedule showing the division of net income under assumption (3) above.

(c) Prepare a partners' capital statement for the year under assumption (3) above.