Trevor and Brian Enter into a Partnership and Decide to Share

question 92

Essay

Trevor and Brian enter into a partnership and decide to share profits and losses as follows:
1.The first allocation is a salary allowance with Trevor receiving $10,000 and Brian receiving $20,000.
2.The second allocation is 20% of the partners' capital balances at year end.On December 31,2019,the
capital balances for Trevor and Brian are $50,000 and $40,000,respectively.
3.Any remaining profit or loss is allocated equally.
For the year ending December 31,2019,the partnership reported net income of $50,000.
Required:
1.Calculate the share of profit allocated to each partner.
2.Prepare the journal entry to record the allocation of profit on December 31,2019.

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Definitions:

Note Payable

A written promissory note where the borrower agrees to pay back a specified sum of money to the lender on a certain date or on demand.