Exercise 12-5 (Part Level Submission) Coburn (beginning capital, $60,000) and We

Question

Exercise 12-5 (Part Level Submission) Coburn (beginning capital, $60,000) and Webb (beginning $20,000 while Webb made drawings of $22,000. Your answer is correct Assume the partnership income sharing agreement calls for income to be divided 45% to Coburn and 55% to Webb 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) Account Titles and Explanation Debit Credit 74000 Coburn, Capital Webb, Capital 407 Click if you would like to Show Work for this question: Open Show Work ON SHOW ANSWER LINK TO T

Explanation / Answer

(b)

Journal

Working note:

Total profit earned = $74,000

Coburn's salary = $30,000

Webb's salary = $25,000

Hence, profit after salaries =74,000 - 30,000 - 25,000

= $19,000

Profit of $19,000 will be divided between Coburn and Webb in their agreed ratio .

Hence, Coburn's share of profit = 19,000 x 45%

=$8,550

Hence, Webb's share of profit = 19,000 x 55%

=$10,450

Hence, total amount received by Coburn = Share of profit + salary

= 8,550 + 30,000

= $38,550

Hence, total amount received by Webb = Share of profit + salary

= 10,450 + 25,000

= $35,450

Kindly give a positive rating if you are satisfied with the answer. Feel free to ask if you have any doubt. Thanks.

Account Debit Credit Income summary 74,000 Coburn's Capital 38,550 Webb's capital 35,450

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