Question

​Adam, Bill, and Charlie are partners. The profit and loss sharing rule between them is 2​:5​:1​, with Bill receiving the largest share and Charlie receiving the smallest. The partnership incurs a net loss of $ 76 comma 000. While closing the Income Summary​ ________. ​ (Do not round any intermediate​ calculations.)

Answer 1

Adam's capital will be debited for $19,000

Bill's capital will be debited for $47,500

Charlie's capital will be debited for $9,500

Step-by-step explanation:

Net loss = $76,000

The loss will be distributed according to their sharing ratio

Total of Ratios = 2 + 5 + 1 = 8

Adams's Share = 76,000 x 2 / 8 = $19,000

Bill's Share = 76,000 x 5 / 8 = $47,500

Charlie's Share = 76,000 x 1 / 8 = $9,500

As there is a loss the Journal Entry will be as follow

DR. Adam's capital account $19,000

DR. Bill's capital account $47,500

DR. Charlie's capital account $9,500

CR. Income Summary Account $76,000