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Distribute payment record

and now we will learn the theory and the practice of distributing partnership income in order to do that let's just quickly review the closing entries we learned in a previous video that all income accounts become zero at the end of the fiscal period and the balance is transferred to this temporary account income summary the balance of all the expense accounts also get transferred to this temporary account income summary leaving the income and expense accounts at zero an income summary winds up having the actual net income of the company once you determine the net income you then should make income summary becomes zero and transfer that net income to the actual owner and put the balance of net income in the owners capital account where the income belongs because that income actually belongs to that owner when you have two owners in the previous example where Gary and Holden or partners and hold and get sixty percent of the profit according to the partnership agreement and Gary only gets forty percent of the profit according to the partnership agreement that means after you closed income and expense to income summary you would still have the same net income as you had before in our previous example the only difference in this case is 60% of the income would be taken from income summary and brought to hold his capital and the other forty percent of the net income that sitting in income summary would be brought to Gary's capital this way income summary would begin at zero for the next period because it's a temporary account and the partners would have their share of the income put into their capital account so each partner respectively would know how much owner's equity he or she has in the company we also learn the last step of the closing is to transfer that owners withdrawals account to that owners capital account so that the computer can finally calculate the ending owner's equity of each partner and withdrawals income summary income and expenses begin the next period with zero and the partners have in their capital accounts a number that reflects their entire share of the owner's equity now that's the way it was done in accounting theory however in practice I advised three equity accounts for each partner number one owners capital owners withdrawals and a new one that I made up owner's income share and that should be the account that the net income from income summary is transferred to owners capital should specifically be for the amount the owner invests of money or any other asset into the business owners withdrawals should be only you should only record withdrawals for amounts that the owner took cash or other asset out of the business and the owners income share equity account which I made up should show the amount of accumulated net income that that specific partner is entitled to you see by separating them you'll always...