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.

Question

Wrinkles

Business

24 July, 14:54

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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Cristina Whitney · Answer 1

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)