Problem K-2 (Part Level Submission) At the end of its first year of operations o
ID: 2429911 • Letter: P
Question
Problem K-2 (Part Level Submission)
At the end of its first year of operations on December 31, 2017, NBS Company’s accounts show the following.
Partner
Drawings
Capital
The capital balance represents each partner’s initial capital investment. Therefore, net income or net loss for 2017 has not been closed to the partners’ capital accounts.
Journalize the entry to record the division of net income for the year 2017 under each of the following independent assumptions. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
No.
Account Titles and Explanation
Debit
Credit
1.
2.
3.
Partner
Drawings
Capital
Art Niensted $22,900 $46,400 Greg Bolen 13,700 36,000 Krista Sayler 11,400 24,000Explanation / Answer
Calculation of division of income in 2nd part
Remaining Income = Net Income - Salary Allowances
= $41,700 - $15,500 - $10,600 = $15,600
Remainder shared equally = $15,600*1/3 = $5,200
Calculation of division of income in 3rd part
Total Interest on Capital = ($46,400*10%)+($36,000*10%)+($24,000*10%)
= $4,640 + $3,600 + $2,400 = $10,640
Net Loss after Interest and Salary = $18,700 - $10,640 - $14,360 = $6,300
Loss to be shared equally = $6,300/3 = $2,100
Journal Entries (Amounts in $)
No. Account Titles and Explanations Debit Credit 1. Income Summary 28,300 A. Niensted, Capital (28,300*6/10) 16,980 G. Bolen, Capital (28,300*3/10) 8,490 K. Sayler, Capital (28,300*1/10) 2,830 2. Income Summary 41,700 A. Niensted, Capital (5,200+15,500) 20,700 G. Bolen, Capital (5,200+10,600) 15,800 K. Sayler, Capital 5,200 3. Income Summary 18,700 A. Niensted, Capital (4,640 interest+14,360 salary-2,100 loss) 16,900 G. Bolen, Capital (3,600 interest-2,100 loss) 1,500 K. Sayler, Capital (2,400 interest - 2,100 loss) 300Related Questions
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