1.86 FARM ACCOUNTING 



Closing Entries of a Partnership. After posting the 

 opening journal entries, all subsequent entries are the saun- 

 as for a single proprietorship until the Loss and Gain ac- 

 count is closed. With two owners instead of one, the entry 

 closing Loss and Gain account assumes the form presented 

 in Illustration 34. 



ILLUSTRATION 34 

 PARTNERSHIP CLOSING ENTRY 



Feb. 28, 1918 



Loss and Gain $1,000 



A. B. Clay, Capital (or Drawing a/c) . . $500 



Ike Laahre Capital (or Drawing a/c) 500 



It is seen that there apparently was a profit of $1000 as 

 a result of the year's operations. One-half of this, or 

 $500, is credited to the Capital ot Drawing account of 

 each partner. 



This procedure may seem strange in view of the fact 

 that Laahre has twice as much capital invested as Clay. 

 Why does lie not receive credit for twice as much profit 

 as Clay, or 2/3 of the total profit? It is an established 

 principle of law, that in the absence of specific agree / 

 'between partners as to the distribution of profits and losses 

 they shall be shared ujuaHjf regardless of the capital in- 

 vested. If Laahre wants two-thirds of the profits been use 

 he has two-thirds of the investment, he should see that such 

 a clause is stated in the partnership contract, commonly 

 known as the articles of copartnership. 



Interest on Partner's Net Capital. Tt sometimes hap- 

 pens that one partner withdraws the amount of his profit 

 at the close of the year while the other leaves his in the 

 business. This results in the latter partner's contributing 

 more to the working capital during the succeeding ; 

 To help correct this condition of apparent inequality, in- 



