Assignment
Will Beck, Ron Beck, and Barb Beck formed the BBB Partnership by making capital contribution of $183,750, $131,250 and $210,000, respectively. They predict annual partnership net income of $225,000 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 allowance of $40,000 to Will, $30,000 to Ron, and $45,000 to Barb, interest allowances of 10% on their initial capital investments; and the balance shared equally.
1.Prepare a table with the following column headings Income(loss) Calculations Will Ron Barb Total Sharing Plan
Use the table to show how to distribute net income of $225,000 for the calendar year under each of the alternative plans being considered.
2. 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 $104,000 and that Will, Ron, and Barb withdraw $17,000,$24,000 and $32,000 respectively, at year-end
3. Prepare the December 31 journal entry to close Income Summary assuming they agree to use plan (c) and that net income is $104,500. Also close the withdrawals accounts.