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Prepare the closing entry to transfer the profit

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Question - Penny and Lane formed a partnership on 1 July 2018 with initial capital balances of $200 000 and $220 000 respectively. For the year ended 30 June 2019, the Profit or Loss Summary account disclosed a final credit balance of $180 000.

Required -

(a) Prepare the closing entry to transfer the profit disclosed in the Profit or Loss Summary account to the Profit Distribution account.

(b) Prepare the closing general journal entry to distribute the profit to Penny and Lane, assuming they have agreed to share profits in the ratio of 3:2.

Reference no: EM132861381

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