Question

What is the closing entry to allocate a net income of $48,000 to Sara, Ellen, and Mary? Respective capital balances are $30,000, $40,000, and $30,000. No agreement was made for division of income.

Answer 1

The answer to your question is:

Debit Income Summary $48,000; credit Sara's Capital $16,000; credit Ellen's Capital $16,000; credit Mary's Capital $16,000.