Sally Cook, Lin Jing, and Ken Schwartz formed the CJS
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Sally Cook, Lin Jing, and Ken Schwartz formed the CJS Partnership by making capital contributions of $144,000, $216,00
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Sally Cook, Lin Jing, and Ken Schwartz formed the CJS Partnership by making capital contributions of $144,000, $216,000, and $120,000, respectively. They predict annual partnership net income of $240,000 and are considering the following alternative plans of sharing income and loss: (a) Equally; (b) In the ratio of their initial capital investments; (c) Salary allowances of $40,000 to Cook, $30,000 to Jing, and $80,000 to Schwartz; interest allowances of 12% on their initial capital investments; and the balance shared equally. Required 1. Prepare a table with the following column headings. Use the table to show how to distribute net income of $240,000 for the calendar year under each of the alternative plans being considered. (Round answers to the nearest whole dollar.) 2. Prepare a statement of partners' equity showing the allocation of income to the partners assuming they agree to use plan (c), that income earned is $87,600, and that Cook, Jing, and Schwartz withdraw $18,000, $38,000, and $24,000, respectively, at year-end. 3. Prepare the December 31 journal entry to close Income Summary assuming they agree to use plan (c) and that net income is $87,600. Also close the withdrawals accounts.
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