Required information

Problem 12-4A Partnership income allocation, statement of partners' equity, and closing entries LO P2

[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 $70,200, $273,000, and $436,800, respectively. They predict annual partnership net income of $466,500 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 $81,200 to Mo, $60,900 to Lu, and $91,500 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.

rev: 09_28_2017_QC_CS-102797

Problem 12-4A Part 1

Required: 1. Use the table to show how to distribute net income of $466,500 for the calendar year under each of the alternative plans being considered. (Do not round intermediate calculations.)

Income (Loss) Sharing Plan Plan (a) Mo Lu Barb Total Net Income (loss) $466,500 Balance allocated equally 0 Balance of income (loss) $466,500 Shares to the partners $0 $0 $0 $0 Plan (b) Mo Lu Barb Total Net Income (loss) $466,500 Balance allocated in proportion to initial investments 0 Balance of income (loss) $466,500 Shares to the partners $0 $0 $0 $0 Plan (c) Mo Lu Barb Total Net income (loss) $466,500 Salary allowances 0 Balance of income (loss) Interest allowances 0 Balance of income (loss) Balance allocated 0 Balance of income (loss) $0 Shares of the partners $0 $0 $0 $0

Problem 12-4A Part 2

2. Prepare a statement of partners equity showing the allocation of income to the partners assuming they agree to use plan (c), that income earned is $466,500, and that Mo, Lu, and Barb withdraw $35,700, $49,700, and $65,700, respectively, at year-end. (Do not round intermediate calculations. Enter all allowances as positive values. Enter losses as negative values.)

	MLB PARTNERSHIP Statement of Partners' Equity For Year Ended December 31 Mo Lu Barb Total Initial partnership investments 0 Net income Total net income 0 Total 0 0 0 0 0 $0 $0 $0 $0

Problem 12-4A Part 3

3. Prepare the December 31 journal entry to close Income Summary assuming they agree to use plan (c) and that net income is $466,500. Mo, Lu, and Barb withdraw $35,700, $49,700, and $65,700, 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 $214,100.

Note: Enter debits before credits.

	Date General Journal Debit Credit Dec 31

Journal entry worksheet

Record the entry to close the partners' withdrawals accounts. (Mo, Lu, and Barb withdraw $35,700, $49,700, and $65,700, respectively, at year-end.)

Note: Enter debits before credits.

	Date General Journal Debit Credit Dec 31