Required informationProblem 12-3A (Algo) Allocating partnership income LO P2Skip to question [The following information applies to the questions displayed below.]Ries, Bax, and Thomas invested $58,000, $74,000, and $82,000, respectively, in a partnership. During its first calendar year, the firm earned $361,500.Required:Prepare the entry to close the firm’s Income Summary account as of its December 31 year-end and to allocate the $361,500 net income under each of the following separate assumptions. oblem 12-3A (Algo) Part 3The partners agreed to share income and loss by providing annual salary allowances of $32,000 to Ries, $27,000 tox, and $39,000 to Thomas; granting 10% interest on the partners' beginning capital investments; and sharing themainder equally.Complete this question by entering your answers in the tabs below.ppropriationof profitsGeneralJournalAllocate $361,500 net income by providing annual salary allowances of $32,000 to Ries, $27,000 to Bax, and $39,000 toThomas; granting 10% interest on the partners' beginning capital investments; and sharing the remainder equally.Supporting Calculationset incomealary allowancesalance after salary allowancesterest allowancesalance after interest and salariesalance allocated equallyalance of incomehares of the partnersRiesBax< Appropriation of profitsThomasTotalGeneral Journal >

The partnership comes into existence when two or more persons agree to do the business and share profits and losses in the profit sharing ratio. The net income is distributed after salary allowance and interest on capital.Income distribution schedule RiesBaxThomasTotalNet income $361,500Salary allowance$32,000$27,000$39,000(98,000)Balance after salary allowance 263,500Interest allowance (10%)5,8007,4008,200(21,400)Balance after interest and salaries 242,100Balance allocated equally (1:1:1)80,70080,70080,700(242,100)Balance of income 0Shares of partners$118,500$115,100$127,900 JOURNALS.no.ParticularsDebit amt $Credit amt $1.Income summary361,500 Ries’ capital 118,500 Bax’ capital 115,100 Thomas’ capital 127,900 (To record distribution of income)

Answered: Required information Problem 12-3A…

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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Required information

Problem 12-3A (Algo) Allocating partnership income LO P2

Skip to question

[The following information applies to the questions displayed below.]

Ries, Bax, and Thomas invested $58,000, $74,000, and $82,000, respectively, in a partnership. During its first calendar year, the firm earned $361,500.

Required:

Prepare the entry to close the firm’s Income Summary account as of its December 31 year-end and to allocate the $361,500 net income under each of the following separate assumptions.

oblem 12-3A (Algo) Part 3
The partners agreed to share income and loss by providing annual salary allowances of $32,000 to Ries, $27,000 to
x, and $39,000 to Thomas; granting 10% interest on the partners' beginning capital investments; and sharing the
mainder equally.
Complete this question by entering your answers in the tabs below.
ppropriation
of profits
General
Journal
Allocate $361,500 net income by providing annual salary allowances of $32,000 to Ries, $27,000 to Bax, and $39,000 to
Thomas; granting 10% interest on the partners' beginning capital investments; and sharing the remainder equally.
Supporting Calculations
et income
alary allowances
alance after salary allowances
terest allowances
alance after interest and salaries
alance allocated equally
alance of income
hares of the partners
Ries
Bax
< Appropriation of profits
Thomas
Total
General Journal >

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

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