Mary and Bob are both general partners

Allocate income to partners. There are two problems on this page.

Problem 1:
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 each partner relative to the total investment of both partners.
5. The net income to allocate is $182,000.
6. Assume that no funds have been distributed this year and that they will not be distributed now. Prepare an entry to allocate
Allocate the net income to partners based on the above partnership terms and prepare allocation journal entries.
Mary

Bob

Totals

Problem 2:
Partnership Facts:
1. John, Alice and Dan are all general partners of a partnership.
2. John is the CEO of the partnership and is allocated a salary of $90,000 per year.
3. Alice is the CFO of the partnership and is allocated a salary of $72,000 per year.
4. Dan is not active in the partnership and is not allocated any salary.
5. All partners are allocated an interest credit from earnings of 5% of their capital account balance before any allocations.
6. The remaining profit or loss after the above allocations is split evenly three ways.
7. Capital account balance before allocations are as follows:
John $150,000.
Alice $120,000.
Dan $258,000.
8. The net income before any allocations are made is $141,000.
9. Assume that no funds have been distributed this year and that they will not be distributed now. Prepare an entry to allocate
Allocate the net income to partners based on the above partnership terms and prepare allocation journal entries.
John

Alice

Dan

Salary
Interest Credit
Total allocation before remainder
Pre-allocation net income
Remainder

90,000
7,500
97,500

72,000
6,000
78,000

12,900
12,900

15,800
81,700

###
62,200

15,800
(2,900)

Total Allocation

Income Summary
Dan Capital Account
John Capital account
Alice Capital Account

Debit
Credit
14,100
2,900
81,700
62,200

t of both partners.

now. Prepare an entry to allocate income to the partner capital accounts.

tion journal entries.

ance before any allocations.

now. Prepare an entry to allocate income to the partner capital accounts.

tion journal entries.
Totals

162,000
26,400
188,400
141,000
47,400
141,000