Chapter 12, Problem 3BPSB

To determine

Concept Introduction:

Partnership: Partnership is one of the types of business origination. Under the partnership, two or more individuals agree to form a business together and share losses and profits in the predetermined ratio.

Allocation of profits: A partnership contract usually provides for the allocation of profit or losses amongst the partners. In the case of absence of allocation method, the partnership net income or losses are allocated equally amongst the partners.

To prepare: The journal entry to close the firm/s income summary account and to allocate the net income to partners under each of the given assumptions