The Net Income Earned by the Cooper,Cross,and Crane Partnership Is

question 49

Multiple Choice

The net income earned by the Cooper,Cross,and Crane partnership is $21,000.Their respective average capital balances are $20,000,$20,000,and $40,000.What is the closing entry to allocate the net income if no agreement was made for division of income?

• A)Debit Income Summary $21,000;credit Cooper,Capital $7,000;credit Cross,Capital $7,000;credit Crane,Capital $7,000
• B)Debit Income Summary $21,000;credit Cooper,Capital $5,250;credit Cross,Capital $5,250;credit Crane,Capital $10,500
• C)Debit Cooper,Capital $7,000;debit Cross,Capital $7,000;debit Crane,Capital $7,000;credit Income Summary $21,000
• D)Not enough information given to allocate

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Definitions:

Grantor

The person or entity who transfers property rights to another, often used in the context of trusts and real estate.

Burns Down

Refers to the act of a structure being destroyed or damaged by fire.

Rent Payment

Rent payment refers to the periodic monetary compensation that a tenant agrees to pay to a landlord in return for the use of rental property.

Joint Tenants

A form of ownership where two or more parties hold property together, with equal rights and obligations, and where upon the death of one, the surviving tenant(s) automatically inherits the deceased's share.