Question

Coburn (beginning capital, $57,000) and Webb (beginning capital $92,000) are partners. During 2017, the partnership earned net income of $65,000, and Coburn made drawings of $14,000 while Webb made drawings of $25,000. Assume the partnership income-sharing agreement calls for income to be divided 35% to Coburn and 65% to Webb. Prepare the journal entry to record the allocation Assume the partnership income-sharing agreement calls for income to be divided with a salary of $30,000 to Coburn and $25,000 to Webb, with the remainder divided 35% to Coburn and 65% to Webb. Prepare the journal entry to record the allocation of net income

Answer 1

Net income is $65000. So balance of income summary is $65000.

Total Salary to be provided is $30000(for Coburn) + $25000(for Webb) = $55000.

Now the balance income is $65000 - $55000 = $10000

So $10000 will be divided as 35% to Coburn and 65% to Webb.

So Coburn's share of balance income is $10000*35% = $3500

And Webb's share of balance income is $10000 * 65% = $6500

So total share = salary + balance share

So total share for Coburn = $30000 + $3500 = $33500

And total share of Webb = $25000 + $6500 = $31500

So journal entry for allocation of income is

Income summary. $65000

Coburn's Capital. $33500

Webb's Capital. $31500