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2 November, 21:36

Coburn (beginning capital, $55,000) and Webb (beginning capital $95,000) are partners. During 2017, the partnership earned net income of $71,000, and Coburn made drawings of $17,000 while Webb made drawings of $25,000. Assume the partnership income-sharing agreement calls for income to be divided 30% to Coburn and 70% to Webb. Prepare the journal entry to record the allocation of net income.

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  1. 3 November, 00:54
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    Given that,

    Beginning capital of Coburn = $55,000

    Beginning capital of Webb = $95,000

    Partnership earned net income = $71,000

    Coburn made drawings = $17,000

    Webb made drawings = $25,000

    Income-sharing ratio = 30:70

    Coburn's share in profits = Net income earned * 30%

    = $71,000 * 0.3

    = $21,300

    Webb's share in profits = Net income earned * 30%

    = $71,000 * 0.7

    = $49,700

    Therefore, the journal entry is as follows:

    Profit and loss A/c Dr. $71,000

    To Coburn's capital A/c $21,300

    To Webb's capital A/c $49,700

    (To record the allocation of net income)
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