The Profit and Loss Sharing Agreement for the Tuttle,Upman,and Veer

question 43

Essay

The profit and loss sharing agreement for the Tuttle,Upman,and Veer partnership provides for residual profits and losses to be allocated 2:3:6 to Tuttle,Upman,and Veer,respectively.In 2014,the partnership recorded $11,000 of net income that was properly allocated to the partners' capital accounts.On January 18,2015,after the books were closed for 2014,Tuttle discovered that the $16,500 payment for the partnership's liability and workers compensation insurance for 2015 was recorded as insurance expense when it was paid on December 28,2014.
Required:
Prepare the necessary correcting entry(s)for the partnership.

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Definitions:

Marginal External Cost

The cost of producing one additional unit of a good or service that is borne by people other than the producer, often not reflected in the product's market price.

Socially Optimal

A state or outcome in which resource allocation maximizes social welfare, considering all costs and benefits to society.

Market Price

The current price at which an asset or service can be bought or sold, determined by supply and demand.

Emissions Standard

Legal limit on the amount of pollutants that a firm can emit.