-Given Problem is a Partnership Trading Business, using Direct Extension Method as per

Worksheet, follows recording as Nature of Expense- not categorizing expenses. Quick recap:
there’s no setting up of a CGS Expense account as you could get its same amount through the
Net Difference of the following accounts (MI beg., MI end, Purchase, PRA, Freight Out) which
are entered under your SCI assuming there normal balances (though MI end is credited in this
column yet debited in SFP). You should get the totals under the SCI column (naturally they
wouldn’t be balanced). The total’s difference is your Net Income but an additional step is to
consider the Income Tax Expense/Payable (which would always be 30% of your Net Income).
The now considered Net Income is deducted by the Tax. Notice how the net income after tax
amount is entered on the opposite of its normal balance as to make the equation balanced
(placing the amount on the underwhelming side). It would also then be deducted by any
amounts from Allocation Methods (Interest Allowance, Salary Allowance, Bonus Allowance).
The Balance of Net Income should also be considered by deducting the Net Income after Tax.
Each partner’s share in the Balance of Net Income would be found when you consider each of
their given ratio proportions.

-Income Tax Expense is automatically debited in SCI column likewise Income Tax Payable is
credited in SFP column.

-Making columns for each partner’s computation on equity. This includes their beginning capital,
drawing accounts, corresponding inputs from Allocation Methods, each partner’s share in the
balance of Net Income. It is only then when you find each partner’s Equity End would you then
transfer that amount to the SFP column.