apter 12 Homework Problems Help 9 Mo Meek, Lu Ling, and Barb Beck formed the MLB

Question

apter 12 Homework Problems Help 9 Mo Meek, Lu Ling, and Barb Beck formed the MLB Partnership by making capital contributions of $67.500, $262.500, and $420,000, respectively. They predict annual partnership net income of $450,000 and are considering the following allowances of $80,000 to Mo, $60,000 to Lu, and S90,000 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. Part 3 ot 3 3. Prepare the December 31 journal entry to close Income Summary assuming they agree to use plan (c) and that net income is $209000. Mo, Lu, and Barb withdiraw $34,000. $48.000. and $64,000, respectively at year-end Also close the withdrawals accounts Journal entry worksheet Record the entry to close the income summary account assuming the partners agree to use plan(c) and net income is $209,000.

Explanation / Answer

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Trans General Journal Dr Cr 1) Income Summary 209000 Mo Meek Capital 67550 Lu lIng Capital 47850 Barb Beck Capital 93600 (being income summary account close) Distribution of Net Income Mo Meek Lu Ling Barrb Beck Bal a Salary allowance 80000 60000 90000 230000 b Interest (10% on inial investment) 6750 26250 42000 75000 Total T 305000 Net income N 209000 Loss T-N 96000 c Loss share in the ratio of 2:4:4 -19200 -38400 -38400 Share of net income a+b+c 67550 47850 93600 2) Mo Meek Capital $34,000 Lu lIng Capital $48,000 Barb Beck Capital $64,000 Mo Meek Withdrawals $34,000 Lu lIng Withdrawals $48,000 Barb Beck Withdrawals $64,000 (being withdrawals account close)

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