The partnership agreement of Sleeter,Frisco,and Kinney provides for annual distribution of profit and loss in the following sequence:
- Frisco,the managing partner,receives a bonus of 10% of net income.
- Each partner receives 5% interest on average capital investment.
- Residual profit or loss is to be divided 4:2:4.
Average capital investments for 2017 were:
Required:
A.Prepare a schedule to allocate net income,assuming operations for the year resulted in:
1.Net income of $75,000.
2.Net income of $15,000.
3.Net loss of $30,000.
B.Prepare the journal entry to close the Income Summary account for each situation above.

Question

The partnership agreement of Sleeter,Frisco,and Kinney provides for annual distribution of profit and loss in the following sequence:
- Frisco,the managing partner,receives a bonus of 10% of net income.
- Each partner receives 5% interest on average capital investment.
- Residual profit or loss is to be divided 4:2:4.
Average capital investments for 2017 were:
  Required:
A.Prepare a schedule to allocate net income,assuming operations for the year resulted in:
1.Net income of $75,000.
2.Net income of $15,000.
3.Net loss of $30,000.
B.Prepare the journal entry to close the Income Summary account for each situation above.

Quizplus · Accepted Answer

The Answer of The partnership agreement of Sleeter,Frisco,and Kinney provides for annual distribution of profit and loss in the following sequence:
- Frisco,the managing partner,receives a bonus of 10% of net income.
- Each partner receives 5% interest on average capital investment.
- Residual profit or loss is to be divided 4:2:4.
Average capital investments for 2017 were:
  Required:
A.Prepare a schedule to allocate net income,assuming operations for the year resulted in:
1.Net income of $75,000.
2.Net income of $15,000.
3.Net loss of $30,000.
B.Prepare the journal entry to close the Income Summary account for each situation above.

The Partnership Agreement of Sleeter,Frisco,and Kinney Provides for Annual Distribution