1. Wallace and Simpson formed a partnership with Wallace contributing $92,000 and Simpson contributing $72,000. Their partnership agreement calls for the income (loss) division to be based on the ratio of capital investments. The partnership had income of $205,000 for its first year of operation. When the Income Summary is closed, the journal entry to allocate partner income is: Debit Income Summary $205,000; credit Wallace, Capital $102,500; credit Simpson, Capital $102,500. Debit Wallace, Capital $102,500; debit Simpson, Capital $102,500; credit Income Summary $205,000. Debit Income Summary $205,000; credit Wallace, Capital $115,000; credit Simpson, Capital $90,000. Debit Cash $205,000; credit Wallace, Capital $115,000; credit Simpson, Capital $90,000. Debit Wallace, Capital $115,000; debit Simpson, Capital $92,000; credit Cash $205,000. Solution Calculation of division of net income : Net income Wallace 205000* 92000 / (92000+72000) $ 115,000 Simpson 205000* 72000 / (92000+72000) $ 90,000 $ 205,000 Journal Entry: Debit Credit Income Summary $ 205,000 Wallace, Capital $ 115,000 Simpson, Capital $ 90,000 .