What Is the Closing Entry to Allocate Net Income of $48,000

question 92

Multiple Choice

What is the closing entry to allocate net income of $48,000 to Sara, Ellen, and Mary? Respective capital balances are $50,000, $81,000, and $24,000. No agreement was made for division of income. (Round any intermediate calculations to two decimal places, and your final answers to the nearest dollar.)

• A) Debit Income Summary $48,000; credit Sara, Capital $16,000; credit Ellen, Capital $16,000; credit Mary, Capital $16,000
• B) Debit Income Summary $48,000; credit Sara, Capital $15,484; credit Ellen, Capital $25,084; credit Mary, Capital $7,432
• C) Debit Salary Expense $48,000; credit Salaries Payable $48,000
• D) Net income cannot be allocated.

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Definitions:

Occasional Cough

A cough that occurs infrequently and is not persistent, often symptomatic of a minor condition or environmental factor.

Common Cold

A viral infectious disease mainly affecting the nose and respiratory passages but can also affect the throat, characterized by sneezing, coughing, and a runny nose.

Influenza

A contagious respiratory illness caused by influenza viruses, leading to symptoms like fever, cough, and body aches.

Allergy

An immune system response to a foreign substance (allergen) that is not typically harmful to the body. This reaction can cause various symptoms, such as sneezing, itching, and swelling.