Q-2: Jahangir, Zain, and Zohaib invested Rs.40,000, Rs.56,000, and Rs.64,000, respectively, in a partnership. During...
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Q-2: Jahangir, Zain, and Zohaib invested Rs.40,000, Rs.56,000, and Rs.64,000, respectively, in a partnership. During its first calendar year, the firm earned Rs.124,500. Required: Prepare the entry to close the firms Income Summary account as of its December 31 year-end and to allocate the Rs.124,500 net income to the partners under each of the following separate assumptions: 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 Rs.33,000 to Jahangir, Rs.28,000 to Zain, and Rs.40,000 to Zohaib; granting 10% interest on the partners beginning capital investments; and sharing the remainder equally.
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