Question

C. Eastwood, A. North, and M. West are manufacturers’ representatives in the architecture business. Their capital accounts in the ENW partnership for 20X1 were as follows:

C. Eastwood, Capital
9/1	8,500	1/1	31,300
		5/1	7,500

A. North, Capital
3/1	9,300	1/1	41,900
		7/1	5,700
		9/1	4,800

M. West, Capital
8/1	13,800	1/1	51,900
		4/1	8,500
		6/1	4,900

Required:
For each of the following independent income-sharing agreements, prepare an income distribution schedule.

a. Salaries are $15,600 to Eastwood, $20,900 to North, and $18,700 to West. Eastwood receives a bonus of 5 percent of net income after deducting his bonus. Interest is 10 percent of ending capital balances. Eastwood, North, and West divide any remainder in a 3:3:4 ratio, respectively. Net income was $78,330. (Amounts that are to be deducted from an individual partner's capital balance should be entered with a minus sign.)

eastwood north west total

profit ratio

ending capital

net income

salary

bonus

interest on ending capital balance

residual income

allocate

total

b. Interest is 10 percent of weighted-average capital balances. Salaries are $24,900 to Eastwood, $22,400 to North, and $26,100 to West. North receives a bonus of 10 percent of net income after deducting the bonus and her salary. Any remainder is divided equally. Net income was $70,030. (Do not round intermediate calculations. Round the final answers to nearest whole dollar. Amounts that are to be deducted from an individual partner's capital balance should be entered with a minus sign.)

eastwood north west total

profit ratio

ending capital

net income

salary

bonus

interest on ending capital balance

residual income

allocate

total

c. West receives a bonus of 20 percent of net income after deducting the bonus and the salaries. Salaries are $21,600 to Eastwood, $18,600 to North, and $16,000 to West. Interest is 10 percent of beginning capital balances. Eastwood, North, and West divide any remainder in an 8:7:5 ratio, respectively. Net income was $95,620. (Do not round intermediate calculations. Amounts that are to be deducted from an individual partner's capital balance should be entered with a minus sign.)

eastwood north west total

profit ratio

ending capital

net income

salary

bonus

interest on ending capital balance

residual income

allocate

total

Answer 1