The profit and loss sharing agreement for the A, B, and C partnership provides for a $15,000 salary allowance to B. Residual profits and losses are allocated 5:3:2 to A, B, and C, respectively. In 2016, the partnership recorded $120,000 of net income that was properly allocated to the partner's capital accounts. On January 25, 2017, after the books were closed for 2016, A discovered that office equipment, purchased for $12,000 on December 29, 2016, was recorded as office expense by the company bookkeeper. Prepare the necessary correcting entry(s) for the partnership.
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is 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, drawings of a partner, etc.
The
Prepare the necessary correcting entry(s) for the partnership.
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