Ask Question
14 March, 21:54

The partnership agreement of E Smith and N Patel state that Smith receives 30% and Patel 70% of partnership income and losses. The partnership net income is $100,000 and is allocated to the partners when the income summary account is closed. Which of the items will be included in the entry to close the Income Summary Account? Debit to N Patel for $70,000Credit to Income Summary for $100,000Debit to E Smith for $30,000Credit to E smith, Capital for $30,000Debit to Income Summary for $100,000Credit to N Patel for $70,000

+4
Answers (1)
  1. 15 March, 01:26
    0
    Debit to Income Summary for $100,000

    Credit to E smith, Capital for $30,000

    Credit to N Patel for $70,000

    Explanation:

    The income summary account will have a credit balance as it stores a net gain for 100,000. to closed we need to debited.

    the capital accounts will icnrease according to how the partners agree to distribute gain and losses:

    30% Smiths and 70% Patel

    100,000 x 30% = 30,000 Smith Capital increase

    100,000 x 70% = 70,000 Patel Capital increase

    They should be credited as are equity account that increase

    Also because debit = credit

    Also, we already posted 100,000 in the debit for income summary
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “The partnership agreement of E Smith and N Patel state that Smith receives 30% and Patel 70% of partnership income and losses. The ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers