Kara Ries, Tammy Bax, and Joe Thomas invested $42,000, $58,000, and $66,000, respectively, in a partnership. During its first calendar year, the firm earned $418,200.
 
Prepare the entry to close the firm’s Income Summary account as of its December 31 year-end and to allocate the $418,200 net income to the partners under each of the following separate assumptions:

The partners agreed to share income and loss in the ratio of their beginning capital investments. (Do not round intermediate calculations. Round final answers to the nearest whole dollar.)

 

Supporting	Percentage of	x	Income	Allocated Income
Computations	Total Equity		Summary	to Capital
Kara Ries		x
Tammy Bax		x
Joe Thomas		x

Journal entry worksheet

Record the entry to close the income summary account assuming the partners have agreed to share income and loss in the ratio of their beginning capital investments

Note: Enter debits before credits.

Date	General Journal	Debit	Credit
Dec 31

 

The partners agreed to share income and loss by providing annual salary allowances of $40,000 to Ries, $35,000 to Bax, and $47,000 to Thomas; granting 10% interest on the partners’ beginning capital investments; and sharing the remainder equally.

Supporting Calculations	Ries	Bax	Thomas	Total
Net income
Salary allowances
Balance after salary allowances
Interest allowances
Balance after interest and salaries
Balance allocated equally
Balance of income
Shares of the partners

 

Journal entry worksheet

Record the entry to close the income summary account assuming the partners have agreed to share income and loss by providing annual salary allowances of $66,000 to Ries, $56,000 to Bax, and $80,000 to Thomas; granting 10% interest on the partners’ beginning capital investments; and sharing the remainder equally.

Note: Enter debits before credits.

Date	General Journal	Debit	Credit
Dec 31