Chapter 4 Forms ofOrganization(6)

Salary allowances：

Ames $ 6，000

Baker $4000 10，000 Allowances for Interest on average capital balances： Ames（$30,000×0.08）2,400

Baker[$10,000+10,000×6÷12）×0.081,200 3，600 ＄4，400 Remainder(（$4，400）divided equally) 2,200 2,200 Each partner’s share $10,600 $7,400

The closing entry would be： Dr. Income Summary 18，000 Cr. Ames，Capital．10，600 Baker，Capital 7，400

If Ames and Baker had withdrawn cash equal to their salary allowances，their withdrawal accounts at the end of the year would show debit balances of＄6，000and＄4，000 respectively．The entry to close the withdrawal accounts would be：

Dr. Ames, Capital 6,000 Baker，Capital．4，000

26

Cr. Ames，withdrawal6，000 Baker，Withdrawal4，000

AMES AND BAKER

Statement of Partners’ Capital

For the year 1993 Ames Baker Total

Capital Balances, Jan.1,1993 $ 30，000 $ 10，000 $ 40，000 Add：Additional Contributions 10，000 10，000 Net Income for 1993 10，600 7，400 18，000 Less: Withdrawals 6,000 4,000 10,000 Capital balance, Dec.31,1993 34,600 23,400 58,000

Field, Mahoney and Sack established a partnership ,they have the following sharing agreement:$5000 salary to Sack and 8% interest on average capital balances and remainder to share equally. The capital balances are listed below: Field: 1.1 $18000;7.1 $12000 Mahoney:1.1$36000;9.1 $36000 Sack:1.1 $8000

The credit balance of income summary on Dec.31 is $21000

27

Please share profit of foregoing partnership. Field:$5120 Mahoney:$7040 Sack:$8840

28