Prepare necessary correcting entry for the partnership

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Question - The profit and loss sharing agreement for the Quade, Reid, and Scott partnership provides for a $15,000 salary allowance to Reid. Residual profits and losses are allocated 5:3:2 to Quade, Reid, and Scott, respectively. In 2016, the partnership recorded $120,000 of net income that was properly allocated to the partner's capital accounts. On January 25, 2017, after the books were closed for 2016, Quade discovered that office equipment, purchased for $12,000 on December 29, 2016, was recorded as office expense by the company bookkeeper.

Required - Prepare the necessary correcting entry(s) for the partnership.

Reference no: EM132826441

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