Return to question 9 Required information Part 3 of 3 [The following information

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Return to question 9 Required information Part 3 of 3 [The following information applies to the questions displayed below.) Mo Meek, Lu Ling, and Barb Beck formed the MLB Partnership by making capital contributions of $72,000 $280,000, and $448,000, respectively. They predict annual partnership net income of $477,000 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 $82,000 to Mo, $61,500 to Lu, and $92,500 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 181 points 3. Prepare the December 31 journal entry to close Income Summary assuming they agree to use plan (c) and that net income is $477,000. Mo, Lu, and Barb withdraw $36,900, $50,900, and $66,900, respectively, at year-end. Also close the withdrawals accounts. Answer is not complete. No Date General Journal Debit Credit Dec 31 ncome summary 157,000 Mo Meek, Capital Lu Ling, Capital 31,400 62,800

Explanation / Answer

Solution 3:

Income (Loss) Sharing plan Plan Particulars Mo Meek Lu Ling Barb Beck Total c Net Income (loss) $477,000.00 Salary Allowances $82,000.00 $61,500.00 $92,500.00 $236,000.00 Balance of Income (Loss) $241,000.00 Interest Allowances $7,200.00 $28,000.00 $44,800.00 $80,000.00 Balance of Income (Loss) $161,000.00 Balance to be allocated in capital investment (2:4:4) $32,200.00 $64,400.00 $64,400.00 $161,000.00 Balance of Income (Loss) $0.00 Total Share of Income $121,400 $153,900 $201,700 $477,000.00

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