Prepare the journal entry to record the allocation

Reference no: EM131912863

Problem

Mary and Nancy invested $80,000 each to form a partnership. Mary has been authorized a salary of $20,000, while Nancy's salary is $25,000. Each partner is to receive 10% on the original capital investment. The profit and loss agreement stipulates that any remaining income or loss is to be divided equally. The partnership had a net loss of $20,000 this year.

Required: Prepare the journal entry to record the allocation of the net loss for the year. Show supporting computations.

Reference no: EM131912863

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