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Nathan, George, and Bill have formed a partnership and the partnership agreement states that Nathan will receive 40% of the profits and George and Bill will share the remainder equally. During the current year, the partnership earns $120,000. What is the closing entry to record the allocation of partnership income

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jepessoa

Answer:

Profits will be distributed in the following way:

Nathan will receive $120,000 x 40% = $48,000

George will receive $120,000 x 30% = $36,000

Bill receive $120,000 x 30% = $36,000

Total = $120,000

Journal entry

Dr Income summary 120,000

    Cr Capital, Nathan 48,000

    Cr Capital, George 36,000

    Cr Capital, Bill 36,000

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