14. Zheng invested $148,000 and Murray invested $248,000 in a partnership. They agreed to share incomes...
14. Zheng invested $148,000 and Murray invested $248,000 in a partnership. They agreed to share incomes and losses by allowing a $72,000 per year salary allowance to Zheng and a $52,000 per year salary allowance to Murray, plus an interest allowance on the partners’ beginning-year capital investments at 10%, with the balance to be shared equally. Assuming net income for the current year is $129,000, the journal entry to allocate net income is:
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Debit Income Summary, $129,000; Credit Zheng, Capital, $69,500, Credit Murray, Capital, $59,500.
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Debit Zheng, Capital, $69,500, Debit Murray, Capital, $59,500; Credit Income Summary, $129,000;
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Debit Income Summary, $129,000; Credit Zheng, Capital, $44,600, Credit Murray, Capital, $84,400.
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Debit Income Summary, $129,000; Credit Zheng, Capital, $44,900, Credit Murray, Capital, $84,100.
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Debit Income Summary, $129,000; Credit Zheng, Capital, $64,500, Credit Murray, Capital, $64,500.
Homework Answers
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Debit Income Summary, $129,000; Credit Zheng, Capital, $69,500, Credit Murray, Capital, $59,500
| Zheng | Murray | Total | |
| Net Income | $ 129,000.00 | ||
| Interest to Zheng (148,000*10%) | $ 14,800.00 | $ (14,800.00) | |
| Interest to Murray (248,000*10%) | $ 24,800.00 | $ (24,800.00) | |
| Salary | $ 72,000.00 | $ 52,000.00 | $ (124,000.00) |
| Net Income After Interest | $ (34,600.00) | ||
| Income distribution | $ (17,300.00) | $ (17,300.00) | $ 34,600.00 |
| $ 69,500.00 | $ 59,500.00 |
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