Question

required information
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ries, bax, and thomas invested $58,000, $74,000, and $82,000, respectively, in a partnership. during its first calendar year, the firm earned $371100.
required:
prepare the entry to close the firms income summary account as of its december 31 year - end and to allocate the $371100 net income under each of the following separate assumptions.

1. the partners agreed to share income and loss by providing annual salary allowances of $33,000 to ries, $28,000 to bax, and $40,000 to thomas; granting 10% interest on the partners beginning capital investments; and sharing the remainder equally.

complete this question by entering your answers in the tabs below.
allocation of profits general journal
allocate $371,100 net income by providing annual salary allowances of $33,000 to ries, $28,000 to bax, and $40,000 to thomas; granting 10% interest on the partners beginning capital investments; and sharing the remainder equally.

Explanation:

Step1: Calculate interest allowances

Ries' interest: $58000\times0.1 = 5800$
Bax's interest: $74000\times0.1=7400$
Thomas' interest: $82000\times0.1 = 8200$

Step2: Calculate total of salary and interest allowances

Total salary allowances: $33000 + 28000+40000=101000$
Total interest allowances: $5800 + 7400+8200 = 21400$
Total of salary and interest: $101000+21400 = 122400$

Step3: Calculate remaining income

Remaining income: $371100 - 122400=248700$

Step4: Allocate remaining income equally

Each partner's share of remaining income: $\frac{248700}{3}=82900$

Step5: Calculate each partner's total income allocation

Ries' total: $33000 + 5800+82900=121700$
Bax's total: $28000 + 7400+82900=118300$
Thomas' total: $40000 + 8200+82900=131100$

	Ries	Bax	Thomas	Total
Salary allowances	33000	28000	40000	101000
Balance after salary allowances				270100
Interest allowances	5800	7400	8200	21400
Balance after interest and salaries				248700
Balance allocated equally	82900	82900	82900	248700
Balance of income	121700	118300	131100	371100

The journal entry to close the Income - Summary account:
Debit Income - Summary $371100$
Credit Ries, Capital $121700$
Credit Bax, Capital $118300$
Credit Thomas, Capital $131100$

Answer:

Journal entry:
Debit: Income - Summary $371100$
Credit: Ries, Capital $121700$
Credit: Bax, Capital $118300$
Credit: Thomas, Capital $131100$
Allocation table as shown above.