Allocation of income

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The Prince-Robbins partnership has the following capital account balances on January 1, 2015:    

 Prince, Capital$90,000   

Robbins, Capital 80,000         

Prince is allocated 60 percent of all profits and losses with the remaining 40 percent assigned to Robbins after interest of 9 percent is given to each partner based on beginning capital balances.      

On January 2, 2015, Jeffrey invests $49,000 cash for a 20 percent interest in the partnership. This transaction is recorded by the goodwill method. After this transaction, 9 percent interest is still to go to each partner.

Profits and losses will then be split as follows:

Prince (50%), Robbins (30%), and Jeffrey (20%).

In 2015, the partnership reports a net income of $19,000.

a. Prepare the journal entry to record Jeffrey entrance into the partnership on January 2, 2015. (If no entry is required for a transaction/event, select “No journal entry required” in the first account field.)

b. Determine the allocation of income at the end of 2015.

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