Profit Distribution for a Partnership

by Faith

For example if profit last year shows $21,600. Shall I distribute this to the partners A & B for the beginning of 2009 - therefore it is an addition to their capital investment? If yes what will be the double entry? If no, then I understand this will become a retained earnings and added to the profit this year, correct?

If I don't distribute this to them in addition to their capital (this year they had some withdrawals from their profit last year) then what should my double entry be this year? Their capital investment last year is less than what they had drawn this year, so what shall I do in order for their record not to show overdrawn?

Thank you


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