Accounting Grade 12

Accounting Grade 12

Solve this

A supply of play money (perhaps $1,400). The money represents partnership net income. Choose a basis for dividing the money among three partners. Each partner invested $10,000 and that two of the partners work in the business but the third does not.

Chapter 27.2

Division of income and loss

Objectives

• Summarize the methods used for partnership profits or losses. .

• Determine the journal entry for dividing the profit and losses

• Comment the effect of net loss on the capital accounts

Open Ended

At the end of each accounting period, the net income or net loss from

partnership operations is divided among the partners. Partners may divide the income or loss among themselves in any way they choose. The specific method should be defined in the partnership agreement. If it is not, the law provides that net income or net loss be divided equally among the partners.

Open Ended

Activity 1

What are the methods used for partnership profits or losses?

What are the situations in which you cannot share the profit equally?

Net loss

When does a net loss occur?

Open Ended

How are profits shared in a corporation?

Open Ended

Activity 2

1.Assume that a partnership with two partners had a $50,000

profit.

2.What is the journal entry if each partner Atul and Amir received equal amounts of the profit of $25,000?

Open Ended

Which account in a corporation’s chart of accounts is similar to a partner’s capital?

Open Ended

Activity 3:

1.If the partnership incurs a net loss of $9000 for the period, each

partner’s share of the net loss is $__________.

2.Write a journal entry for the net loss incurred by the business started by Jack and Mark.

Open Ended

If a partnership experiences a net loss for the period, will the partners’ capital accounts be debited or credited?

Prepare the T Account for each of the entry in the notebook

1.Investment by two partners Sun and Moon is $50,000 and $25000. They have a profit of $40000.

2.If they have a loss of 5000 each how is the T account recorded.

Extra work

https://s3.amazonaws.com/connect-nonprod.mheducation.com/Media/Demo/hssl/accounting_tutorials/let_me_try/Batch_5/ch27_1/index.html

Open Ended

Plenary

Ask questions to each of your friends.