Answer:
Dr Income Summary $237,000
Cr Farmer, Capital $162,000
Cr Taylor,Capital $75,000
Explanation:
Preparation of the journal entry to allocate net income
Based on the information given in a situation where their partnership agreement calls for Farmer to receive the amount of $87,000 per year salary in which the remaining income or loss is to be divided equally among them which means that Assuming the net income for the current year is the amount of $237,000, the journal entry to allocate the net income is:
Dr Income Summary $237,000
Cr Farmer, Capital $162,000
($237,000-$75,000)
Cr Taylor,Capital $75,000
[($237,000-$87,000)/2]
