Escobar and Woods are partners who share profits and losses in the ratio of 60 and 40 percent, respectively. The partnership agreement provides that each will be paid a yearly salary of $18,000. The salaries were paid to the partners during 2019 and were charged to the partners' drawing accounts. The Income Summary account has a credit balance of $60,000 after revenue and expense accounts are closed at the end of the year.
1. What amount of net income or loss will be allocated to Escobar?
2. What amount of net income or loss will be allocated to Woods?

Question

Quizplus · Accepted Answer

The Answer of Escobar and Woods are partners who share profits and losses in the ratio of 60 and 40 percent, respectively. The partnership agreement provides that each will be paid a yearly salary of $18,000. The salaries were paid to the partners during 2019 and were charged to the partners' drawing accounts. The Income Summary account has a credit balance of $60,000 after revenue and expense accounts are closed at the end of the year.
1. What amount of net income or loss will be allocated to Escobar?
2. What amount of net income or loss will be allocated to Woods?

Escobar and Woods Are Partners Who Share Profits and Losses