Question - At December 31, 2015 (the fiscal year-end), the adjusted trial balance of LMN Company shows the following values before the closing entries are prepared:
|
Partner
|
Drawings
|
Capital
|
|
Lois Lang
|
$12,000
|
$30,000
|
|
Mary Mio
|
9,000
|
20,000
|
|
Sue Norton
|
6,000
|
10,000
|
Part 1) Journalize the entry to recorded division of net income for 2015 under each of the following assumptions:
a) Net income is $28,000 and income is shared 5:3:2.
b) Net income is $30,000 ; Lang and Mio are given salary allowances of $10,000 and $8,000, respectively, and the remainder is shared equally.
c) Net income is $25,200; each partner is allowed interest of 10% on beg. capital balances; Lang is given a $15,000 salary allowance, and the remainder is shared equally.
Part 2) Prepare a statement of partners' capital for the year under assumption (c) above.