On January 1, 2011, Lamb and Mona LLP admitted Noris to a 20% interest in net assets for an investment of $50,000 cash. Prior to the admission of Noris, Lamb and Mona had net assets of $100,000 and an income-sharing ratio of 25% to Lamb and 75% to Mona. After the admission of Noris, the partnership contract included the following provisions:
• Salary of $40,000 a year to Noris.
• Remaining net income in ratio Lamb 20%, Mona 60%, Noris 20%
• During the fiscal year ended December 31, 2011, the partnership had income of $90,000 prior to recognition of salary to Noris.
Record the journal entry to allocate the salary of Noris.

Question

Quizplus · Accepted Answer

The Answer of On January 1, 2011, Lamb and Mona LLP admitted Noris to a 20% interest in net assets for an investment of $50,000 cash. Prior to the admission of Noris, Lamb and Mona had net assets of $100,000 and an income-sharing ratio of 25% to Lamb and 75% to Mona. After the admission of Noris, the partnership contract included the following provisions:
• Salary of $40,000 a year to Noris.
• Remaining net income in ratio Lamb 20%, Mona 60%, Noris 20%
• During the fiscal year ended December 31, 2011, the partnership had income of $90,000 prior to recognition of salary to Noris.
Record the journal entry to allocate the salary of Noris.

On January 1, 2011, Lamb and Mona LLP Admitted Noris