Problem 12-1

Problem 12-1

The following was invested in RCA Partnership: R. Reagan J. Carter J. Anderson

During its first calendar-year, the firm earned .

Required

Prepare the entry to close the firm’s Income Summary account as of its December 31 year-end and to allocate the net income to the partners under each of the following separate assumptions: The partners

1) Have no agreement on the method of sharing income and loss 2) Agreed to share income and loss in the ratio of their beginning capital investments 3) Agreed to share income and loss by providing annual salary allowances of

to Reagan, to Carter, and to Anderson; granting interest on the partners’ beginning capital investments; and sharing the remainder equally.

Check (3) Cr. Anderson, Capital,

210,000$

80,000$

25,000$ 40,000$ 30,000$

66,500

11%

210,000$ 50,000 70,000