Partnership Facts: 1. Mary and Bob are both general partners of a partnership. 2
ID: 2490899 • Letter: P
Question
Partnership Facts:
1. Mary and Bob are both general partners of a partnership.
2. Mary invested $225,000 in the partnership.
3. Bob invested $150,000 in the partnership.
4. Income is allocated based on the investment of eachpartner relative to the total investment of both partners.
5. The net income to allocate is $182,000.
6. Assume that no funds have bene distributed this year and that they will not be distributed now. Prepare an entry to allocate income to the partner capital accounts.
Allocate the net income to partners based on the above partnership terms and prepare allocation journal entries.
Mary Bob Totals
Explanation / Answer
Apportionment of income based on relative capital
For Mary
Income a/c Dr.........109,200
To Mary's capital a/c...109,000
For Bob
Income a/c Dr.........72,800
To Bob's capital a/c...72,800
Allocation
Mary. 225,000
Bob. 150,000
Mary's share of income. =109,200(182000*225000/375000)
Bob's share of income =72,800(182000-109200)