Question

In: Accounting

The Trump, Clinton, Mueller Partnership has been around for several years The partners share profits equally...

The Trump, Clinton, Mueller Partnership has been around for several years
The partners share profits equally but Trump and Clinton take 40% of losses while Mueller only take 20% of losses.  
Mueller receives $30,000 in salary and all partners get 10% return on their beginning of the year capital accounts.
Each year Trump makes a withdrawl of $6000 for hair care products and Clinton makes a withdrawl of $15,000 for new pant suits.
At the beginning of 2017 Trump, Clinton and Mueller had the following capital accounts
Trump 500,000
Clinton 300,000
Mueller 200,000
Income before Mueller salary and partners interest is as follows:
2017 400,000
2018 50,000
2019 300,000
Required: determine each partner's capital account on December 31
2017
2018
2019

Solutions

Expert Solution

a) Partner's Capital Account for 2017

Profit for the year = $400,000

(Amounts in $)

Trump Clinton Mueller Total
Beginning Balance 500,000 300,000 200,000 1,000,000
Salary Allowances 30,000 30,000
Interest (10% of Beginning Capital account balance) 50,000 30,000 20,000 100,000
550,000 330,000 250,000 1,130,000
Remainder Profit (Equally) (400,000-130,000) 90,000 90,000 90,000 270,000
640,000 420,000 340,000 1,400,000
Less: Withdrawals (6,000) (15,000)
Ending Balance 634,000 405,000 340,000 1,379,000

b) Partner's Capital Account for 2018

Profit for the year = $50,000

(Amounts in $)

Trump Clinton Mueller Total
Beginning Balance 634,000 405,000 340,000 1,379,000
Salary Allowances 30,000 30,000
Interest (10% of Beginning Capital account balance) 63,400 40,500 34,000 137,900
697,400 445,500 404,000 1,546,900
Remainder Loss (50,000-167,900) (40% 40% 20%) (47,160) (47,160) (23,580) (117,900)
650,240 398,340 380,420 1,429,000
Less: Withdrawals (6,000) (15,000) (21,000)
Ending Balance 644,240 383,340 380,420 1,408,000

c) Partner's Capital Account for 2019

Profit for the year = $300,000

(Amounts in $)

Trump Clinton Mueller Total
Beginning Balance 644,240 383,340 380,420 1,408,000
Salary Allowances 30,000 30,000
Interest (10% of Beginning Capital account balance) 64,424 38,334 38,042 140,800
708,664 421,674 448,462 1,578,800
Remainder Profit (Equally) (300,000-170,800) 43066 43067 43067 129,200
751,730 464,741 491,529 1,708,000
Less: Withdrawals (6,000) (15,000) (21,000)
Ending Balance 745,730 449,741 491,529 1,687,000

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