If J & M have an equal partnership and share profit and loss in the agreed ration of 50/50, the entry to record a net income distribution of $100,000.00 would be a credit to J & M capital for $50,000 and a debit to:

Question

Quizplus · Accepted Answer

When a partnership has an equal sharing of profit and loss, the net income distribution would be split equally between the partners. In this case, since the total net income is $100,000.00, $50,000.00 would be credited to J & M's capital accounts.

The other side of the entry would be a debit to Income Summary for $100,000.00. Income Summary is a temporary account used to summarize the revenues and expenses for the period. By debiting Income Summary, we are moving the net income into the partners' capital accounts.

Therefore, the correct choice is C, Income Summary for $100,000.00.

If J & M Have an Equal Partnership and Share