At the end of its first year of operations on December 31, 2020, Blossom Company
ID: 2333105 • Letter: A
Question
At the end of its first year of operations on December 31, 2020, Blossom Company's accounts show the following. Partner Drawings Capital Art Niensted Greg Bolen Krista Sayler The capital balance represents each partner's initial capital investment. Therefore, net income or net loss for 2020 has not been closed to the partners' capital $22,600 14,000 11,300 $46,200 39,500 29,500 accounts ournalize the entry to record the division of net income for the year 2020 under each of the following independent assumptions. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) 1. Net income is $29,200. Income is shared 6:3:1. 2. Net income is $40,700. Niensted and Bolen are given salary allowances of $14,900 and $10,200, respectively. The remainder is shared equally. 3. Net income is $18,800. Each partner is allowed interest of 10% on beginning capital balances. Niensted is given a $13,580 salary allowance. The remainder is shared equally. No. Account Titles and Explanation 1. Debit CreditExplanation / Answer
Answers
--Case 1
No.
Accounts title
Debit
Credit
Working
1
Income Summary
$ 29,200.00
[Balance of Net Income]
Art Niensted Capital
$ 17,520.00
[29200 x 6/10]
Greg Bolen Capital
$ 8,760.00
[29200 x 3/10]
Krista Sayler Capital
$ 2,920.00
[29200 x 1/10]
---Case 2
No.
Accounts title
Debit
Credit
Working
2
Income Summary
$ 15,600.00
[Balance of Net Income - Salary Allowances - 40700 - 14900 - 10200]
Art Niensted Capital
$ 5200.00
[15600/3]
Greg Bolen Capital
$ 5200.00
[15600/3]
Krista Sayler Capital
$ 5200.00
[15600/3]
---Case 3
Amount of Remainder profit = 18800 - [(46200 + 39500 + 29500) x 10%] – 13580 = $ (6,300 )
No.
Accounts title
Debit
Credit
Working
3
Art Niensted Capital
$ 2100.00
[6300 x 1/3]
Greg Bolen Capital
$ 2100.00
[6300 x 1/3]
Krista Sayler Capital
$ 2100.00
[6300 x 1/3]
Income Summary
$ 6,300.00
[see working note]
Art Niensted Capital
Greg Bolen Capital
Krista Sayler Capital
TOTAL
Salary Allowance
$ 13,580.00
$ 13,580.00
Interest Allowed on Capital
$ 4,620.00
$ 3,950.00
$ 2,950.00
$ 11,520.00
Total Salary & Interest
$ 18,200.00
$ 3,950.00
$ 2,950.00
$ 25,100.00
Remaining Excess/deficiency
$ (2,100.00)
$ (2,100.00)
$ (2,100.00)
$ (6,300.00)
Total Division of Net Income
$ 16,100.00
$ 1,850.00
$ 850.00
$ 18,800.00
---As at 31 Dec, 2020
Art Niensted Capital
Greg Bolen Capital
Krista Sayler Capital
TOTAL
Beginning Balance
$ 46,200.00
$ 39,500.00
$ 29,500.00
$ 115,200.00
Add: Salary & Interest
$ 18,200.00
$ 3,950.00
$ 2,950.00
$ 25,100.00
$ 64,400.00
$ 43,450.00
$ 32,450.00
$ 140,300.00
Less: Net Loss
$ (2,100.00)
$ (2,100.00)
$ (2,100.00)
$ 6,300.00
Ending Balance
$ 62,300.00
$ 41,350.00
$ 30,350.00
$ 134,000.00
No.
Accounts title
Debit
Credit
Working
1
Income Summary
$ 29,200.00
[Balance of Net Income]
Art Niensted Capital
$ 17,520.00
[29200 x 6/10]
Greg Bolen Capital
$ 8,760.00
[29200 x 3/10]
Krista Sayler Capital
$ 2,920.00
[29200 x 1/10]
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