Question

The partnership agreement of Martinez and Magden states that L. Martinez will receive 50% of all income and losses. During the current period, the company has net income of $70,000. To close the Income Summary account and give Martinez her share of net income, the partnership

Answer 1

Answer:

The partnership will credit the L. Martinez, Capital account for $35,000

Explanation:

Given

Net Income = $70,000

Percentage Share of income and loss = 50%

Since, it's an income, then Martinez will be credited.

Amount to be credited is calculated as follows.

Amount = Net Income * Percentage Share of income and loss

By Substituton

Amount = $70,000 * 50%

Amount = $70,000 * 50/100

Amount = $70,000 * ½

Amount = $70,000/2

Amount = $35,000

Hence, the partnership will credit the L. Martinez, Capital account for $35,000