210k views
0 votes
Arrow and Inlet share income and losses equally after allowing for salaries to Arrow of $27,000 and $33,000 to Inlet. Net income for the partnership is $75,000. If income should be divided $34,500 to Arrow and $40,500 to Inlet, the journal entry will include a

1 Answer

7 votes

Answer:

the journal entry will include a debit to income summary $ 15000

and credit to Each partner's share $ 7,500 as it is equally distributed

Step-by-step explanation:

Arrow Salary $27,000

Inlet Salary $33,000

Profit = Arrow's Income Share - Arrow's Salary= $34,500- $27,000= $ 7,500

Profit = Inlet's Income Share - Inlet's Salary=$40,500- $33,000= $ 7,500

The profit earned was $ 15,000 after allowing each partner's salary .

Income Summary $ 15,000 Debit

Arrow Share $7,500 Credit

Inlet Share$ 7,500 Credit

It could be written as

Income Summary $ 75,000 Debit

Arrow Capital $ 34,500 Credit

Inlet Capital $ 40,500 Credit

Salary being credited to capital accounts along with the share of profit.

User Nicola Pezzotti
by
8.1k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

9.4m questions

12.2m answers

Categories