Question
In: Accounting
The partnership agreement of Alice, Baron & Crane was formed on January 2, 2017. The original...
The partnership agreement of Alice, Baron & Crane was formed on January 2, 2017. The original cash investments were as follows:
Alice $ 96,000
Baron 144,000
Crane 216,000
According to the partnership contract, the partners were to be remunerated as follows:
- Salaries of $14,400 for Alice, $12,000 for Baron, and $13,600 for Crane.
- Interest at 12% on the average capital account balances during the year.
- Remainder divided 40% to Alice, 30% to Baron and 30% to Crane.
Income before partner withdrawals during the year ended December 31, 2017 was $92,080. During 2017 Alice invested additional capital of $24,000 in the partnership on July 1; Crane withdrew capital of $36,000 from the partnership on October 1. Each of the partners had monthly withdrawals of $1,250 against their shares of income for the year.
REQUIRED: Prepare a schedule showing the allocation of the partnership income to each partner.
Solutions
Expert Solution
Schedule showing allocation of partnership income.
| alice | Baron | Crane | |
| a.Original investments | 96000 | 144000 | 216000 |
| additions | 240000 | ||
| withdrawals | (36000) | ||
| total | 120000 | 144000 | 180000 |
| b. Average capital |
120000/2 =60000 |
144000 |
180000/2 =90000 |
| c.Interest @12%*(b) | 7200 | 17280 | 10800 |
| d.Salary | 14400 | 12000 | 13600 |
| e.% of profit sharing | 40% | 30% | 30% |
| f. Profit |
92080*40% =36832 |
92080*30% =27624 |
92080*30% =27624 |
| g.Monthly withdrawals against income |
1250*12 =15000 |
1250*12 =15000 |
1250*12 =15000 |
|
h.Final payment to partner on profit [f-g] |
21832 | 12624 | 12624 |
ekkarill92 answered 2 years agoRelated Solutions
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