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Quc LIVII 4. 20 Illains At the end of its first year of operations, December 31, 2016, ABC Company's unadjusted accounts show the following: Partner
Quc LIVII 4. 20 Illains At the end of its first year of operations, December 31, 2016, ABC Company's unadjusted accounts show the following: Partner S. Abbott D. Bartlett R. Cross Drawings $23,000 14,000 10,000 Capital $50,000 30.000 20,000 The capital balance above represents each partner's initial capital investment. No closing entries have been recorded for net income (loss) or drawings as yet. Required: a) Journalize the entry to record the division of net income for the year ended December 31, 2016 under each of the following independent assumptions: (Hint: you may find it helpful to prepare a schedule like one of those shown in the textbook) 1. Net income is shared on the ratio of their initial investments. Net income is $47,000. 2. Net income is $34,000. Bartlett and Cross are given salary allowances of $15,000 and $10,000 respectively. The remainder is shared equally. 3. Net income is $23,000. Each partner is allowed interest of 5% on beginning capital balances. Cross is given a $15,000 salary allowance. The remainder is shared equally. b) Journalize the entry to close each partner's drawings account. c) Prepare a statement of partners' equity for the year end under assumption #3 in part (a) above
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