Section 3 Various Partnership Scenarios (24 marks)

X, Y, and Z are partners with capital balances of $80,000, $40,000, and $40,000, respectively. Profit for the year is $30,000.

Prepare the necessary journal entries to close Income Summary to the capital accounts if:

a) The partners agree to divide income based on their beginning-of-year capital balances. (4 marks)

b) The partners agree to divide income based on the ratio of 5:3:2, respectively. (4 marks)

c) The partnership agreement is silent as to the division of income. (4 marks)

d) Mung and Long allow Kang to join their partnership for $50,000 cash. The recorded value of the equity being purchased is $40,000.

Prepare the journal entry to