Problem - Jenkins, Willis, and Trent invested $200,000, $350,000 and $450,000, respectively, in a partnership. During its First year, the firm recorded net income of 600,000.00
Required: Prepare entries to close the firm's Income Summary account as of december 31, and to allocate the net income to the partners under each of the following assumptions.
a. The partners did not produce any special agreement on the method of sharing incomes.
B. The partners agreed to share net income and losses in the ratio of their beginning investments.
c. The partners agreed to share income by: providing annual salary allowances of 110,000 to Jenkins, 120,000 to Willis, 55,000 to Trent; allowing 15% interest on the partners' beginning investments; and sharing the remainder equally.
Calculate also the net income according to the 3 assumptions outlined in the questions.