Reference no: EM132469274

Assume that Carpenter, Kneller, and Hartley are partners. Their Capital account balances were $35,000, $30,000, and $24,000, respectively, at the beginning of the current fiscal year. The partnership agreement provides for an allowance of interest at the rate of 6% on the capital balances at the beginning of the year, and salary allowances of $8,000, $11,000, and $12,000, respectively. The remaining partnership net income is to be divided 371/2% / 371/2% / 25%.

Question 1: How would you record the general journal entry to distribute the net income of a partnership?

Option A. As a debit to the Cash account and credits to the partners' Capital accounts

Option B. As debits to the partners' Capital accounts and a credit to Cash

Option C. As a debit to the Income Summary account and credits to the partners' Capital accounts

Option D. As debits to the partners' Capital accounts and a credit to the Income Summary account