Chapter 12, Problem 4PSA

To determine

Introduction:

Partners can agree to any method of dividing income or loss. The common methods to divide income or loss use (1)a stated ratio basis (2) the ratio of capital balances (3) the salary and interest allowances and any remainder according to a fixed ratio.

To calculate:

Prepare a table with the following capital headings. Use the table to show how to distribute net income of $450000 for the calendar year under each of the alternative plans being considered.

To determine

Introduction:

A financial report that depicts the changes in total of partner's capital accounts during an accounting period.

To calculate:

Prepare a statement of partners' equityshowing the allocation of income to the partners assuming they agree to use plan (c);that income earned is$209000,and that Mo,Lu and Barb withdraw$34000,$48000 and $64000 ,respectively, at year end.

To determine

Introduction:

Income summary account is closed in the following manner:

To calculate:

Prepare the December 31 journal entry to close Income summary assuming they agree to use Plan C and that net income is $209000.Also close the withdrawals accounts.