question archive Mary and Nancy invested $80,000 each to form a partnership
Mary and Nancy invested $80,000 each to form a partnership
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Mary and Nancy invested $80,000 each to form a partnership. Mary has been authorized a salary of $20,000, while Nancy's salary is $25,000. Each partner is to receive 10% on the original capital investment. The profit and loss agreement stipulates that any remaining income or loss is to be divided equally. The partnership had a net loss of $20,000 this year.
Prepare the journal entry to record the allocation of the net loss for the year. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
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Answer:
| Account titles and explanation | Debit | Credit |
| Mary, Capital | $12,500 | |
| Nancy, Capital | $7,500 | |
| Income Summary | $20,000 |
