Jakobs,Penn,and Lundt Are Partners with Beginning-Of-Year Capital Balances of $400,000,$320,000,and

question 88

Essay

Jakobs,Penn,and Lundt are partners with beginning-of-year capital balances of $400,000,$320,000,and $160,000,respectively.The partners agreed to share income and loss as follows: Salary of $30,000 to Jakobs,$50,000 to Penn,and $36,000 to Lundt.An interest allowance of 8% on beginning-of-year capital balances.Any remaining balance is to be divided equally.If partnership net income for the year is $190,000,determine each partner's share and make the appropriate journal entry to close the Income Summary to the capital accounts.

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Definitions:

Debit Side

The debit side of an account records increases in assets or expenses and decreases in liabilities, equity, and income.

T Account

A visual representation of a general ledger account that helps in understanding the effects of transactions on each account.

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Credit Side

The right side of an accounting ledger where credits are recorded, typically indicating an increase in liabilities or revenues or a decrease in assets or expenses.