Problem 12-02A a-c (Video) At the end of its first year of operations on Decembe
ID: 2330047 • Letter: P
Question
Problem 12-02A a-c (Video) At the end of its first year of operations on December 31, 2020, Crane Company's accounts show the following. Partner Drawings Capital Art Niensted Greg Boler Krista Sayler $23,000 13,800 10,700 $42,200 38,500 27,500 The capital balance represents each partner's initial capital investment. Therefore, net income or net loss for 2020 has not been closed to the partners' capital accounts. Journalize the entry to record the division of net income for the year 2020 under each of the following independent assumptions. (Credit account titles are automatically indented when amount is entered. Do not indent manualy) 1. Net income is $28,300. Income is shared 6:3:1 2. Net income is $39,800. Niensted and Bolen are given salary allowances of $15,500 and $10,80o, respectively. The remainder is shared equaly | 3. Net income is $19,100. Each partner is allowed interest of 10% on beginning capital balances. Niensted is given a $14,580 salary allowance. Th e remainder is shared equally. No. Account Titles and Explanation 1. Debit Credit Version 4.24.9.3
Explanation / Answer
1 Net income is $28,300, and income is shared 6:3:1. Income Summary 28,300 Art Niensted, Capital ($28,300 X 60%) 16,980 Greg Bolen, Capital ($28,300X 30%) 8,490 Krista Sayler, Capital ($28,300X 10%) 2,830 2 Net income is $39,800, Niensted and Bolen are given salary allowance of $15,500 and $10,800, respectively, and the remainder is shared equality. Income Summary 39,800 Art Niensted, Capital ($15,500 + $4,500) 20,000 Greg Bolen, Capital ($10,800 + $4,500) 15,300 Krista Sayler, Capital ($0 + $4,500) 4,500 Note: Net income $39,800 Salaries allowance Niensted (15,500) Bolen (10,800) Remainder $13,500 To each partner ($13,500X1/3) $4,500 3 Net income is $19,100; each partner is allowed interest of 10% on beginning capital balance; Niensted is given a $14,580 salary allowance; and the remainder is shared equally Income Summary 19,100 Art Niensted, Capital ($4,220 + $14,580 - $2,100) 16,700 Greg Bolen, Capital ($3,850 - $2,100) 1,750 Krista Sayler, Capital ($2,750 - $2,100) 650 Note: Net income $19,100 Interest on Capital Niensted ($42,200 X 10%) (4,220) Bolen ($38,500 X 10%) (3,850) Sayler ($27,500 X 10%) (2,750) Balance $8,280 Salary allowance Niensted (14,580) Remainder ($6,300) To each partner (-$6,300 X 1/3) (2,100) b DIVISION OF NET INCOME Salary allowance Art Niensted Greg Bolen Krista Sayler Total $14,580 $14,580 Interest allowance Art Niensted ($42,200X10%) 4,220 Greg Bolen ($38,500 X 10%) $3,850 Krista sayler ($27,500 X 10%) $2,750 Total Interest 10,820 Total Salaries and Interest 18,800 3,850 2,750 25,400 Remaining Excess/Deficiency, -$6,300 Art Niensted (-$6,300X1/3) -2,100 Greg Bolen (-$6,300X1/3) -2,100 Krista sayler (-$6,300X1/3) -2,100 Total Remainder -6,300 Total division of net income $16,700 $1,750 $650 $19,100 c CRANE COMPANY Partners' Capital Statement For the Year Ended December 31, 2020 Art Niensted Greg Bolen Krista Sayler Total Capital, January $ 42,200 $ 38,500 $ 27,500 $ 108,200 Add: Net Income 16,700 1,750 650 19,100 58,900 40,250 28,150 127,300 Less: Drawing 23,000 13,800 10,700 47,500 Capital, December 31 35,900 26,450 17,450 79,800