Farmer and Taylor formed a partnership with capital contributions of $245,000 and $295,000, respectively. Their partnership agreement calls for Farmer to receive a $79,000 per year salary allowance. The remaining income or loss is to be divided equally. Assuming net Income for the current year Is $189,000, the journal entry to allocate net Income is:
Farmer and Taylor formed a partnership with capital contributions of $245,000 and $295,000, respectively. Their partnership agreement calls for Farmer to receive a $79,000 per year salary allowance. The remaining income or loss is to be divided equally. Assuming net Income for the current year Is $189,000, the journal entry to allocate net Income is:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Farmer and Taylor formed a partnership with capital contributions of $245,000 and $295,000, respectively. Their
partnership agreement calls for Farmer to receive a $79,000 per year salary allowance. The remaining income or
loss is to be divided equally. Assuming net Income for the current year Is $189.000, the Journal entry to allocate net
Income is:
Multiple Choice
Debit Income Summary, $189,000; Credit Farmer. Capital, $94,500; C Taylor. Capital,
$94,500.
Debit Income Summary, $189,000; Credit Farmer, Capital, $134,000: Credit Taylor, Capital,
$55,000.
Debit Income Summary, $189,000; Credit Farmer, Capital, $166,000: Credit Taylor, Capital.
$23,000.
Debit Income Summary, $189,000: Credit Taylor, Capital, $134,000; Credit Farmer, Capital.
$55.000.
Debit Income Summary, $189,000; Credit Farmer, Capital, $48,840; Credit Taylor, Capital,
$140,160.
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