Accounting Grade 12

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.

Activity 1

What are the methods used for partnership profits or losses?

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

How are profits shared in a corporation?

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?

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

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.

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

Plenary

Ask questions to each of your friends.