Ex. 2–3 Division of net income of Webb & Yu LLP for 2005:

| | |Webb |Yu |Combined |
| |a. Equally (in absence of agreement) |$24,000 |$24,000 |$48,000 |
| |b. [pic] to Webb and [pic] to Yu (on basis of average capital account | | | |
| |balances*) |20,000 |28,000 |48,000 |
| |c. In 40:80 ratio (on basis of beginning capital account balances) | | | |
| | |16,000 |32,000 |48,000 |
| |d. In 60:40 ratio (on basis of ending capital account balances) | | | |
| | |28,800 |19,200 |48,000 |
| | | | | |
| | *Average capital account balances: | | | |
| |Webb: ($40,000 x [pic]) + ($60,000 x [pic]) | | |$ 50,000 |
| |Yu: ($80,000 x [pic]) + ($40,000 x [pic]) | | |70,000 |
| | Total average capital balances for Webb and Yu | | |$120,000 |

Ex. 2–7 Journal entries for Bates & Carter LLP, Dec. 31, 2005:

| |Partners’ Salaries Expense ($40,000 + $60,000) |100,000 | |
| | Bates, Capital | |40,000 |
| |Carter, Capital | |60,000 |
| |To accrue salaries to partners. | | |
| | | | |
| |Income Summary ($200,000 – $100,000) |100,000 | |
| |Bates, Capital | |42,400 |
| |Carter, Capital | |57,600 |
| | | |
| | | |
| |To record division of net income as follows: | | |
| | |Bates | |Carter | |Combined |
| |Interest |$48,000 | |$60,000 | |$108,000 |
| |Remainder | (5,600) | | (2,400) | | (8,000) |
| | Totals |$42,400 |