Use the Following Information to Answer the Question(s)below

question 25

Essay

Use the following information to answer the question(s)below.
Adam,Bella,and Chris operate a partnership with a complex profit and loss sharing agreement.The average capital balance for Adam,Bella and Chris on December 31,2011 is $120,000,$270,000,and $340,000,respectively.A 6% interest allocation is provided to each partner based on the average capital balance on December 31,2011.Adam and Bella receive salary allocations of $40,000 and $50,000,respectively.If partnership net income is above $160,000,after the salary allocations are considered (but before the interest allocations are considered),Chris will receive a bonus of 10% of the income (pre-salary and interest,but net of the bonus).All residual income is allocated in the ratios of 2:2:6 to Adam,Bella,and Chris,respectively.
-Required:
1.Prepare a schedule to allocate income or loss to the partners assuming that the partnership incurs a net loss of $26,200 for 2011.
2.Prepare a journal entry to distribute the partnership's loss to the partners (assume that an Income Summary account is used by the partnership).

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