On 1 January 2018, GEHAN and RAED entered into a partnership contributing $180,000 and $90,000 respectively...

On 1 January 2018, GEHAN and RAED entered into a partnership contributing $180,000 and $90,000 respectively and sharing profits in the ratio of 2:1. RAED is allowed a salary of $15,750 per year. Interest on capital is allowed at 10% per annum. GEHAN is entitled to receive a commission of $105,000. During the year, RAED withdrew $18,000 and GEHAN $7,800; interest on the same being 12% per annum. Profit in 2018 before the above-mentioned adjustments was $75,000.

Instructions

You are required to prepare

Draw up the key chart to show every partner’s share (1 mark)
The Profit and Loss Appropriation Account (2marks)
the partners’ Capital Accounts of GEHAN and RAED. (2marks)

Solutions

Expert Solution

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Dividing Partnership Income Tyler Hawes and Piper Albright formed a partnership, investing $60,000 and $180,000, respectively....

Dividing Partnership Income Tyler Hawes and Piper Albright formed a partnership, investing $60,000 and $180,000, respectively. Determine their participation in the year's net income of $280,000 under each of the following independent assumptions: No agreement concerning division of net income. Divided in the ratio of original capital investment. Interest at the rate of 6% allowed on original investments and the remainder divided in the ratio of 2:3. Salary allowances of $40,000 and $46,000, respectively, and the balance divided equally. Allowance...

Tamer, Lune and Nazra have a partnership. Their capital balances are $180,000, $260,000 and $300,000, respectively....

Tamer, Lune and Nazra have a partnership. Their capital balances are $180,000, $260,000 and $300,000, respectively. They share profits and losses 25%, 35% and 40%, respectively. Rana wants to become a partner with a 10 percent share in partnership capital with a $120,000 cash contribution to the partnership. The fair market value for the partner is equal to book values Required: 1- Calculate Tamer, Lune and Nazra and Rana ending capital balances under the Bonus Method and Goodwill Method. 2-...

Gillian and Emily invested $90,000 and $130,000, respectively, in a partnership they began one year ago....

Gillian and Emily invested $90,000 and $130,000, respectively, in a partnership they began one year ago. Assuming the partnership's profit was $250,000 for this year, calculate the share of the profit each partner should receive under the following assumptions. (1) The partnership agreement specifies a salary allowance of $50,000 to Gillian and $60,000 to Emily, and the balance shared equally. (2) The partnership agreement specifies a salary allowance of $45,000 to Gillian and $60,000 to Emily, 10% interest on their...

Tyler Hawes and Piper Albright formed a partnership, investing $180,000 and $60,000, respectively. Determine their participation...

Tyler Hawes and Piper Albright formed a partnership, investing $180,000 and $60,000, respectively. Determine their participation in the year's net income of $280,000 under each of the following independent assumptions: No agreement concerning division of net income. Divided in the ratio of original capital investment. Interest at the rate of 6% allowed on original investments and the remainder divided in the ratio of 2:3. Salary allowances of $36,000 and $48,000, respectively, and the balance divided equally. Allowance of interest at...

Tyler Hawes and Piper Albright formed a partnership, investing $180,000 and $120,000, respectively. Determine their participation...

Tyler Hawes and Piper Albright formed a partnership, investing $180,000 and $120,000, respectively. Determine their participation in the year's net income of $366,000 under each of the following independent assumptions: No agreement concerning division of net income. Divided in the ratio of original capital investment. Interest at the rate of 10% allowed on original investments and the remainder divided in the ratio of 2:3. Salary allowances of $48,000 and $66,000, respectively, and the balance divided equally. Allowance of interest at...

McGill and Smyth have capital balances on January 1 of $40,000 and $30,000, respectively. The partnership...

McGill and Smyth have capital balances on January 1 of $40,000 and $30,000, respectively. The partnership income-sharing agreement provides for (1) annual salaries of $15,000 for McGill and $10,000 for Smyth, (2) interest at 10% on beginning capital balances, and (3) remaining income or loss to be shared 60% by McGill and 40% by Smyth. Prepare a schedule showing the distribution of net income, assuming net income is $65,000. (If an amount reduces the account balance then enter with a...

McGill and Smyth have capital balances on January 1 of $48,000 and $30,000, respectively. The partnership...

McGill and Smyth have capital balances on January 1 of $48,000 and $30,000, respectively. The partnership income-sharing agreement provides for (1) annual salaries of $22,000 for McGill and $18,000 for Smyth, (2) interest at 10% on beginning capital balances, and (3) remaining income or loss to be shared 70% by McGill and 30% by Smyth. (1) Prepare a schedule showing the distribution of net income, assuming net income is $71,000 (2) Prepare a schedule showing the distribution of net income,...

McGill and Smyth have capital balances on January 1 of $46,000 and $38,000, respectively. The partnership...

McGill and Smyth have capital balances on January 1 of $46,000 and $38,000, respectively. The partnership income-sharing agreement provides for (1) annual salaries of $25,000 for McGill and $20,000 for Smyth, (2) interest at 10% on beginning capital balances, and (3) remaining income or loss to be shared 70% by McGill and 30% by Smyth. (1) Prepare a schedule showing the distribution of net income, assuming net income is $79,000. (If an amount reduces the account balance then enter with...

On January 1, 2018, the Moody Company entered into a transaction for 100% of the outstanding...

On January 1, 2018, the Moody Company entered into a transaction for 100% of the outstanding common stock of Osorio Company. To acquire these shares, Moody issued $400 in long-term liabilities and also issued 40 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Moody paid $20 to lawyers, accountants, and brokers for assistance in bringing about this acquisition. Another $15 was paid in connection with stock issuance costs....

A performs bookkeeping and tax- reporting services to startup companies. On January 1, 2018, A entered...

A performs bookkeeping and tax- reporting services to startup companies. On January 1, 2018, A entered into a 3-year service contract with B. B promises to pay $9,000 at the beginning of each year, which at contract inception is the stand-alone selling price for these services. At the end of the second year, the contract is modified and the fee for the third year of services is reduced to $8,000. In addition, B agrees to pay an additional $22,000 at...

Subjects