Prepare the entry to close the firm income summary account

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Question: Matt Albin, Ryan Peters and Seth Ramsey invested $82,000, $49,200 and $32,800, respectively, in a partnership. During its first calendar year, the firm earned $135,000.

Required: Prepare the entry to close the firm's Income Summary account as of its December 31 year-end and to allocate the $135,000 net income to the partners under each of the following separate assumptions. (Round answers to whole dollars.) The partners

(1) have no agreement on the method of sharing income and loss;

(2) agreed to share income and loss in the ratio of their beginning capital investments; and

(3) agreed to share income and loss by providing annual salary allowances of $48,000 to Albin, $36,000 to Peters, and $25,000 to Ramsey; granting 10% interest on the partners' beginning capital investments; and sharing the remainder equally.

Reference no: EM131534342

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