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

question 8

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 2011,the partnership recorded $11,000 of net income that was properly allocated to the partners' capital accounts.On January 18,2012,after the books were closed for 2011,Tuttle discovered that the $16,500 payment for the partnership's liability and workers compensation insurance for 2012 was recorded as insurance expense when it was paid on December 28,2011.
Required:
Prepare the necessary correcting entry(s)for the partnership.

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Definitions:

Present Value

Today's calculated value of a future monetary sum or cash flow patterns, utilizing a specific rate of return.

Discount Rate

The interest rate used to determine the present value of future cash flows, reflecting the time value of money and risk of cash flows.

Annuity

A financial instrument that provides a steady flow of payments to a person, often employed as a source of income for those in retirement.

Present Value

The present-day valuation of a money amount expected in the future or series of cash inflows, factoring in a specific return rate.