Fundamental Accounting Principles: P12-3A Will Beck, Ron Beck, and Barb Beck formed the BBB

Fundamental Accounting Principles

P12-3A
Will Beck, Ron Beck, and Barb Beck formed the BBB partnership by making capital contributions 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 allowances 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.

Required:
1. Prepare a table with the following headings, 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 allocations of income to the partners assuming they agree to use plan c. that income earned is 104,500 and that Will, Ron and Barb withdrew 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.
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