Reference no: EM132565449

Partnership:

• Reena, Sita and Umesh runs a partnership firm. Capital balance at the beginning of the year was $150,000 for Reena and $240,000 for Sita and $360,000 for Umesh.

• Sita invested additional $40,000 during the year and Umesh withdrawn $15,000 from his capital balance during the year. As per agreement they are entitled for interest allowance for 12% on their capital balance at the beginning of the year. They are also entitled for a salary allowance of $ 17,000 for Sita, $28,500 for Umesh and $22,700 for Reena.. Remaining income or loss to be distributed equally. Net income during the year was $675,000.

Question 1) Provide journal entry for Changes to capital during year.

Question 2) Distribution of net income to all partners

Question 3) Provide the ending balance for each partner.