apter 12 Homework Problems Help 9 Mo Meek Lu Ling and Barb B

apter 12 Homework Problems Help 9 Mo Meek, Lu Ling, and Barb Beck formed the MLB Partnership by making capital contributions of $67.500, $262.500, and $420,000, respectively. They predict annual partnership net income of $450,000 and are considering the following allowances of $80,000 to Mo, $60,000 to Lu, and S90,000 to Barb interest allowances of 10% on their initial capital investments; and the balance shared as follows: 20% to Mo. 40% to Lu, and 40% to Barb. Part 3 ot 3 3. Prepare the December 31 journal entry to close Income Summary assuming they agree to use plan (c) and that net income is $209000. Mo, Lu, and Barb withdiraw $34,000. $48.000. and $64,000, respectively at year-end Also close the withdrawals accounts Journal entry worksheet Record the entry to close the income summary account assuming the partners agree to use plan(c) and net income is $209,000.

Solution

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Trans	General Journal	Dr	Cr
1)	Income Summary	209000
	Mo Meek Capital		67550
	Lu lIng Capital		47850
	Barb Beck Capital		93600
	(being income summary account close)
	Distribution of Net Income
		Mo Meek	Lu Ling	Barrb Beck	Bal
a	Salary allowance	80000	60000	90000	230000
b	Interest (10% on inial investment)	6750	26250	42000	75000
	Total T				305000
	Net income N				209000
	Loss T-N				96000
c	Loss share in the ratio of 2:4:4	-19200	-38400	-38400
	Share of net income a+b+c	67550	47850	93600
2)	Mo Meek Capital	$34,000
	Lu lIng Capital	$48,000
	Barb Beck Capital	$64,000
	Mo Meek Withdrawals		$34,000
	Lu lIng Withdrawals		$48,000
	Barb Beck Withdrawals		$64,000
	(being withdrawals account close)