question archive Holden, Phillips, and Rogers are partners with beginning-year capital balances of $ 120,000, 560,000, and $60,000, respectively
Holden, Phillips, and Rogers are partners with beginning-year capital balances of $ 120,000, 560,000, and $60,000, respectively
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Holden, Phillips, and Rogers are partners with beginning-year capital balances of $ 120,000, 560,000, and $60,000, respectively. Partnership net income for the year is $84,000. Make the necessary journal entry to close Income Summary to the capital accounts if:
(a) Partners agree to divide income based on their beginning-year capital balances.
(b) Partners agree to divide income based on the ratio of 5:3:2 (Holden:Phillips:Rogers), respectively.
(c) Partnership agreement is silent as to division of income and less.
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Answer:
| In Capital Ratio | In 5:3:2 | If Silent (then Equally) | ||||
| Profit and Loss Appropriation A/c Dr. | $ 84,000 | $ 84,000 | $ 84,000 | |||
| To Holden Capital A/c | $ 13,622 | $ 42,000 | $ 28,000 | |||
| To Philips Capital A/c | $ 63,568 | $ 25,200 | $ 28,000 | |||
| To Rogers Capital A/c | $ 6,811 | $ 16,800 | $ 28,000 | |||
