Farrell and Jimmy Enter into a Partnership Agreement on 1

Multiple Choice

Farrell and Jimmy enter into a partnership agreement on 1 May 2017.Farrell contributes $70,000 and Jimmy contributes $150,000 as their capital contributions.They decide to share profits and losses in the ratio of their respective capital account balances.The net profit for the year ended 31 December 2017 is $80,000.Which of the following is the correct journal entry to record the allocation of profit?

A) $$\begin{array} { | l | l | l | } \hline \text { Farrell, capital } & 25,455 & \\\hline \text { jimmy, captial } & 54,545 & \\\hline \text { Income summary } & & 80,000 \\\hline\end{array}$$
B) $$\begin{array} { | c | c | c | } \hline \text { Farrell, captial } & 54,545 & \\\hline \text { Jimmy, capital } & & 54,545 \\\hline\end{array}$$
C) $$\begin{array} { | c | l | l | } \hline \text { Income summary } & 30,000 & \\\hline \text { Farrell, capital } & & 25,455 \\\hline \text { Jimmy, captial } & & 54,545 \\\hline\end{array}$$
D) $$\begin{array} { | c | c | c | } \hline \text { Income summary } & 29,090 & \\\hline \text { Farrell, capital } & 25,455 & \\\hline \text { Jimmy, capital } & & 54,545 \\\hline\end{array}$$