For the year ended May 31, 2017, the firm of Ace, Bay and Cap, L.L.P. had a net
ID: 2600696 • Letter: F
Question
For the year ended May 31, 2017, the firm of Ace, Bay and Cap, L.L.P. had a net loss of $120,000 before any allocation among the partners. The partnership contract provided for the following: Salaries" of $20,000 to Ace, $30,000 to Bay, and $40,000 to Cap, a "bonus" of 20% of income, if any (after salaries and bonus) to Ace, and theremaining income or loss allocated 20% to Ace, 50% to Bay, and 30% to Cap. Prepare the jounal entry to close out the net income or loss for Ace, Bay and Cap. L.L.P. on May 31, 2017.Explanation / Answer
May 31, 2017 Salarier A/c Dr. $90,000
To Ace's Capital A/c $20,000
To Bay's Capital A/c $30,000
To Cap's Capital A/c $40,000
(Being salaries distributed to the partners)
May 31, 2017 Ace's Capital A/c Dr. $42,000
Bay's Capital A/c Dr. $105,000
Cap's Capital A/c Dr. $63,000
To Net Loss $210,000
(Being loss distributed among partners in the agreed ratio )