Reference no: EM132794915
Question - Partner A, Partner B and Partner C are partners in ABC Associates. The partnership agreement provides that income be allocated in the following manner:
a. Each partner receives interest of 15% of beginning capital.
b. Partner A receives an annual salary of $75,000.
c. Partner B receives an annual salary of $60,000.
d. Partner C receives a bonus of 20% of partnership income after deducting interest, salaries and bonus.
e. Any remaining income is shared in a 2:4:4 ratio.
f. All provisions are to be fully implemented.
g. The partnership income for the year was $300,000.
h. Beginning capital balances are: Partner A $330,000; Partner B $150,000; Partner C $95,000.
Required - Determine the allocation of partnership income among the partners. Display your calculations in detail:
1. Document the balance in each partner's capital account.
2. Document a balance in the "Income Summary" account of $300,000.
3. Prepare the entry to allocate the partnership income to each partner.
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