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18 July, 14:29

Farmer and Taylor formed a partnership with capital contributions of $250,000 and $300,000, respectively. Their partnership agreement calls for Farmer to receive a $80,000 per year salary. The remaining income or loss is to be divided equally. Assuming net income for the current year is $195,000, the journal entry to allocate net income is:

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  1. 18 July, 14:56
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    The journal entry is made as follows;

    Explanation:

    Net Income $195,000

    Salary of farmer ($80,000)

    Net distributive income $115,000

    Per partner share $115,000/2=$57,500

    Income Summary Dr.$115,000

    Farmer Capital Cr.$57,500

    Taylor Capital Cr.$57,500
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