Coburn (beginning capital, $60,000) and Webb (beginning capital $86,000) are par

Question

Coburn (beginning capital, $60,000) and Webb (beginning capital $86,000) are partners. During 2017, the partnership earned net income of $74,000, and Coburn made drawings of $20,000 while Webb made drawings of $22,000.

A- Assume the partnership income-sharing agreement calls for income to be divided with a salary of $35,000 to Coburn and $30,000 to Webb, interest of 11% on beginning capital, and the remainder divided 50%–50%. Prepare the journal entry to record the allocation of net income. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

B-Compute the partners’ ending capital balances under the assumption in part (A) above.

Explanation / Answer

Coburn Webb Total Salary 35000 30000 65000 Interest on capital 6600 9460 16060 Remaining income -3530 -3530 -7060 Total 38070 35930 74000 a Income Summary 74000      Coburn capital 38070      Webb capital 35930 b Ending capital Coburn 78070 =60000+38070-20000 Webb 99930 =86000+35930-22000

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