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Required information Problem 12-4A Partnership income allocation, statement of partners' equity, and closing entries LO P2 [The following...

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Accounting

Required information

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

[The following information applies to the questionsdisplayed below.]

Mo Meek, Lu Ling, and Barb Beck formed the MLB Partnership bymaking capital contributions of $71,100, $276,500, and $442,400,respectively. They predict annual partnership net income of$471,000 and are considering the following alternative plans ofsharing income and loss: (a) equally; (b) in the ratio of theirinitial capital investments; or (c) salary allowances of $81,600 toMo, $61,200 to Lu, and $92,000 to Barb; interest allowances of 10%on their initial capital investments; and the balance shared asfollows: 20% to Mo, 40% to Lu, and 40% to Barb.

rev: 09_28_2017_QC_CS-102797

Problem 12-4A Part 3

3. Prepare the December 31 journal entry toclose Income Summary assuming they agree to use plan (c) and thatnet income is $471,000. Mo, Lu, and Barb withdraw $36,400, $50,400,and $66,400, respectively, at year-end. Also close the withdrawalsaccounts.

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3. Journal entry
Date Particulars L.F Amount ($) Amount ($)
Dec-31 Income summary 4,71,000
            Mo Capital 1,20,150
            Lu Capital 1,51,730
            Barb capital 1,99,120
(To Close the Income summary account )
Mo Capital 36,400
Lu Capital 50,400
Barb capital 66,400
             Mo withdrawal 36,400
               Lu withdrawal 50,400
                Barb Withdrawal 66,400
(To Close the withdrawals account )
Working note
Mo Lu Barb Total
Initial Investment            71,100 2,76,500       4,42,400    7,90,000
Net Income
Salary allowances            81,600      61,200          92,000    2,34,800
Interest allowances              7,110      27,650          44,240       79,000
Balance allocated (157,200 in 20:40:40)            31,440      62,880          62,880    1,57,200
Total Net Income(Given)         1,20,150 1,51,730       1,99,120    4,71,000

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