a. Partners agree to divide income based on their beginning-year capital balances — Glade Marker and Walters are with beginning-year 100 000 respectively Partnership net

Glade, Marker, and Walters are partners with beginning-year capital balances of $100,000, $50,000, and $50,000, respectively. Partnership net income for the year is $84,000. Make the necessary journal entry to close Income Summary to the capital accounts if:

a. Partners agree to divide income based on their beginning-year capital balances.

b. Partners agree to divide income based on the ratio of 5:3:2 (Glade: Marker: Walters), respectively.

c. Partnership agreement is silent as to division of income and less.

SOLUTION

a)

Partners agree to divide income based on their beginning-year capital balances.

Income summary account $84,000

Glade account $42,000

Marker account $21,000

Walters account $21,000