Will Beck, Ron Beck, and Barb Beck formed the BBB Partnership by making capital

Question

Will Beck, Ron Beck, and Barb Beck formed the BBB Partnership by making capital contributions of $183,750, $131,250, and $210,000, respectively. They predict annual partnership net income of $225,000 and are considering the following alternative plans of sharing income and loss: (a) equally; (b) in the ratio of their initial capital investments; or (c) salary allowances of $40,000 to Will, $30,000 to Ron, and $45,000 to Barb; interest allowances of 10% on their initial capital investments; and the balance shared equally. references Problem 12-3A Part 3 3. Prepare the December 31 journal entry to close Income Summary assuming they agree to use plan (c) and that net income is $104,500. Also close the withdrawals accounts. (Round your answers to the nearest whole dollar amount. Omit the "$" sign in your response.) Date General Journal Debit Credit Dec. 31

Explanation / Answer

As per plan (c ) Will Ron Barb Salary 40000 30000 45000 Int. 18375 13125 21000 Total amount shared 167500 Net Income 104500 Loss shared equally 63000 ie 21000 each. Entry on Dec 31 capital accounts dr 63000,Profit & loss account cr 63000 Please rate the answer as lifesaver. Thank u in adbvance. God Bless:)

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