In 2005, the partners of Julio & Fong LLP shared net income and losses equally, but in 2006 the income-sharing ratio was changed to 60% for Julio and 40% for Fong. On December 31, 2005, inventories were understated by $12,000. On December 31, 2006, employees' salaries payable in the amount of $5,400 and short-term prepayments of $2,700 had not been recognized in the accounting records.
Prepare a correcting journal entry on December 31, 2006, assuming that the accounting records had been closed for 2006. Show supporting computations.

Question

Quizplus · Accepted Answer

The Answer of In 2005, the partners of Julio & Fong LLP shared net income and losses equally, but in 2006 the income-sharing ratio was changed to 60% for Julio and 40% for Fong. On December 31, 2005, inventories were understated by $12,000. On December 31, 2006, employees' salaries payable in the amount of $5,400 and short-term prepayments of $2,700 had not been recognized in the accounting records.
Prepare a correcting journal entry on December 31, 2006, assuming that the accounting records had been closed for 2006. Show supporting computations.

In 2005, the Partners of Julio & Fong LLP Shared