Response to the following :
David Coe withdrew cash of $50,000 for personal use, and Jen Price withdrew cash of $40,000 during the year. Using the data from situation (c) in problem, journalize the entries to close (1) the income summary account and (2) the partners' drawing accounts. Explanations are not required. What was the overall effect on partnership capital?
Problem:
David Coe and Jen Price form a partnership, investing $40,000 and $80,000, respectively. Determine their shares of net income or net loss for each of the following situations:
a. Net loss is $60,000 and the partners have no written partnership agreement.
b. Net income is $90,000, and the partnership agreement states that the partners share profits and losses on the basis of their capital contributions.
c. Net income is $98,000. The first $60,000 is shared on the basis of partner capital contributions. The next $30,000 is based on partner service, with Coe receiving 30% and Price receiving 70%. The remainder is shared equally.