The journal entry to record the division of a partnership profit consists of a debit to each partner's capital account and a credit to Cash.

Question

Quizplus · Accepted Answer

The correct journal entry to record the division of a partnership profit consists of a debit to the Income Summary account (or directly from the relevant revenue and expense accounts if Income Summary is not used) and a credit to each partner's capital account based on the agreed profit-sharing ratio. Cash is not involved in this entry unless the profits are being immediately distributed.

The Journal Entry to Record the Division of a Partnership