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What the partnership entry to record the transaction is

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Problem 1: After one year of operation of the Smith & Kline partnership, Smith's capital account contains a balance of $46,000 and Kline's capital account contains $54,000. Each partner originally invested $40,000 in the firm. The partnership agreement provides for yearly salary allowances of $12,000 to Smith and $15,000 to Kline, with any balance to be shared equally. There were no additional investments during the year, and no withdrawals were made except for the stipulated salary allowances. The net income of the partnership must have been:

A. 27,000

B. 20,000

C. 45,000

D. 47,000

Problem 2: J and K have partnership capital balances of $10,000 and $6,000, respectively. K decides to sell his interest to Z for $8,000, after receiving approval of J. The partnership entry to record this transaction is:

A. Cash 8,000; Z, Capital 8,000

B. K, Capital 6,000; Z, Capital 6,000

C. K, Capital 8,000; Z, Capital 8,000

D. K, Capital 6,000 J, Capital 2,000; Z, Capital 8,000

Reference no: EM132756464

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