Tuesday
September 1, 2015

Homework Help: Accounting

Posted by Bryan on Monday, June 9, 2014 at 10:27am.

What is the closing entry to allocate a net income of $48,000 to Sara, Ellen, and Mary? Respective capital balances are $30,000, $40,000, and $30,000. No agreement was made for division of income.
A. Debit Income Summary $48,000; credit Sara’s Capital $16,000; credit Ellen’s Capital $16,000; credit Mary’s Capital $16,000

B. Debit Income Summary $48,000; credit Sara’s Capital $14,400; credit Ellen’s Capital $19,200; credit Mary’s Capital $14,400

C. Debit Salary Expense $48,000; credit Salaries Payable $48,000

D. Net income cannot be allocated.

I believe the answer is C

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