Reference no: EM132817688

Question - The Scott Stewart and Rick Smith Partnership earned a net income of $90,000 for the current year. Beginning capital balances were $70,000 for Stewart and $140,000 for Smith. Prepare the closing entry to transfer net income to the partners' capital accounts based on the following independent net income agreement:

Interest on beginning capital balances of 10%, secondly $45,000 to Stewart and $50,000 to Smith based on service and the balance divided equally. (10%)

Monica Turner and Anna Frost have capital balances of $200,000 and $250,000, respectively and have no net income/net loss agreement. On January 1, 2017, they agree to admit Emma Brown into their partnership and give her a 30% interest in the business.

Prepare the entry to admit the new partner and determine the balance in each partners' capital account immediately following the admission of Emma if she contributes $250,000 in cash to the business.