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Pellah (Beginning Capital $80000) and M

Question 166

Essay

Pellah (beginning capital $80000) and M. Berry (beginning capital $120000) are partners. During 2017 the partnership earned net income of $90000 and Pellah made drawings of $24000 while Berry made drawings of $32000.
Instructions
(a) Assume the partnership income-sharing agreement calls for income to be divided 40% to Pellah and 60% to Berry. Prepare the journal entry to record the allocation of net income.
(b) Assume the partnership income-sharing agreement calls for income to be divided with a salary of $40000 to Pellah and $35000 to Berry with the remainder divided 40% to Pellah and 60% to Berry. Prepare the journal entry to record the allocation of net income.
(c) Assume the partnership income-sharing agreement calls for income to be divided with a salary of $50000 to Pellah and $45000 to Berry interest of 10% on beginning capital and the remainder divided 50%-50%. Prepare the journal entry to record the allocation of net income.
(d) Compute the partners' ending capital balances under the assumption in part (c).

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