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: Debit Income Summary, $189,000; Credit Farmer, Capital, $94,500; Credit Taylor, Capital, $94,500. Debit Income Summary, $189,000; Credit Farmer, Capital, $166,000; Credit Taylor, Capital, $23,000. Debit Income Summary, $189,000; Credit Farmer, Capital, $48,840; Credit Taylor, Capital, $140,160. Debit Income Summary, $189,000; Credit Farmer, Capital, $134,000; Credit Taylor, Capital, $55,000. Debit Income Summary, $189,000; Credit Taylor, Capital, $134,000; Credit Farmer, Capital, $55,000.

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: Debit Income Summary, $189,000; Credit Farmer, Capital, $94,500; Credit Taylor, Capital, $94,500. Debit Income Summary, $189,000; Credit Farmer, Capital, $166,000; Credit Taylor, Capital, $23,000. Debit Income Summary, $189,000; Credit Farmer, Capital, $48,840; Credit Taylor, Capital, $140,160. Debit Income Summary, $189,000; Credit Farmer, Capital, $134,000; Credit Taylor, Capital, $55,000. Debit Income Summary, $189,000; Credit Taylor, Capital, $134,000; Credit Farmer, Capital, $55,000.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

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:
dit Fo
Debit Income Summary, $189,000; Credit Farmer, Capital, $94,500; Credit
Taylor, Capital, $94,500.
Debit Income Summary, $189,000; Credit Farmer, Capital, $166,000; Credit
Taylor, Capital, $23,000.
Debit Income Summary, $189,000; Credit Farmer, Capital, $48,840; Credit
Taylor, Capital, $140,160.
Debit Income Summary, $189,000; Credit Farmer, Capital, $134,000; Credit
Taylor, Capital, $55,000.
Debit Income Summary, $189,000; Credit Taylor, Capital, $134,000; Credit
Farmer, Capital, $55,000.

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