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 $36,000 to Ries, $31,000 to Bex, and $43,000 to Thomas; granting 10% interest on the partners' beginning capital investments; and sharing the
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
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Ries, Bax, and Thomas invested $54,000, $70,000, and $78,000, respectively, in a partnership.
During its first calendar year, the firm earned $392,700.
Required:
Prepare the entry to close the firm's Income Summary account as of its December 31 year-end
and to allocate the $392,700 net income under each of the following separate assumptions.
3. The partners agreed to share income and loss by providing annual salary allowances of $36,000 to Ries,
$31,000 to Bax, and $43,000 to Thomas; granting 10% interest on the partners' beginning capital
investments; and sharing the remainder equally.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8fcb2168-4edc-441d-8d35-bd7abdfcf6e5%2Fff7f6fb7-2e2d-4bc7-9202-532a9963de9d%2Fswogf15i_processed.jpeg&w=3840&q=75)
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