Q1. X and Y established a partnership on January 1, 2018. X invested cash of $60,000...

Q1. X and Y established a partnership on January 1, 2018. X invested cash of $60,000 and B invested $70,000 in cash and equipment with a book value of $30,000 and fair value of $50,000. For both partners, the beginning capital balance was to equal the initial investment. X and Y agreed to the following procedure for sharing profits and losses:

- 9% interest on the yearly beginning capital balance

- $10 per hour of work that can be billed to the partnership's clients

- the remainder divided in a 2:3 ratio

The Articles of Partnership specified that each partner should withdraw no more than $1,000 per month.

For 2018, the partnership's income was $40,000. X had 400 billable hours, and Y worked 700 billable hours.

In 2019, the partnership's income was $30,000, and X and Y worked 800 and 1,200 billable hours respectively. Each partner withdrew $1,000 per month throughout 2018 and 2019. (round off decimal places)

1. Determine the amount of net income allocated to each partner for 2018.

2. Determine the amount of net income allocated to each partner for 2019.

Expert Solution

ekkarill92 answered 1 year ago

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