The net income earned by the Brian, Bill, and Bob partnership is $24,000. Their respective average capital balances are $28,000, $28,000, and $56,000. What is the closing entry to allocate the net income if no agreement was made for division of income?
A) Debit Income Summary $24,000; credit Brian, Capital $8,000; credit Bill, Capital $8,000; credit Bob, Capital $8,000
B) Debit Income Summary $24,000; credit Brian, Capital $6,000; credit Bill, Capital $6,000; credit Bob, Capital $12,000
C) Debit Brian, Capital $8,000; debit Bill, Capital $8,000; debit Bob, Capital $8,000; credit Income Summary $24,000
D) Not enough information given to allocate

Question

Quizplus · Accepted Answer

In the absence of an agreement, net income is typically divided equally among partners. Therefore, each partner receives $8,000.

The Net Income Earned by the Brian, Bill, and Bob