Bill Beck, Bruce Beck, and Barb Beck formed the BBB Partnership by making capital contributions...
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Bill Beck, Bruce Beck, and Barb Beck formed the BBB Partnership by making capital contributions of $80,100, $311,500, and $498,400, respectively. They predict annual partnership net income of $523,500 and are considering the following alternative plans of sharing income and loss: (a) equally; (b) in the ratio of their initial capital investments; or (c) salary allowances of $85,600 to Bill, $64,200 to Bruce, and $97,000 to Barb; interest allowances of 10% on their initial capital investments; and the balance shared as follows: 20% to Bill, 40% to Bruce, and 40% to Barb.
1
Prepare a statement of partners equity showing the allocation of income to the partners assuming they agree to use plan (c), that income earned is $232,800, and that Bill, Bruce, and Barb withdraw $42,400, $56,400, and $72,400, respectively, at year-end. WHAT IS THE BALANCE ALLOCATED FOR BILL, BRUCE AND BARB?
2.
Prepare the December 31 journal entry to close Income Summary assuming they agree to use plan (c) and that net income is $232,800. Also close the withdrawals accounts. Record the entry to close the income summary account assuming the partners agree to use plan(c) and net income is $232,800.
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