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:

  1. Salaries of $14,400 for Alice, $12,000 for Baron, and $13,600 for Crane.
  2. Interest at 12% on the average capital account balances during the year.
  3. 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 ago
Next > < Previous

Related Solutions

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...
On January 1, 2016, Jack and Maya formed a partnership, JM Co. with the agreement that...
On January 1, 2016, Jack and Maya formed a partnership, JM Co. with the agreement that income would be split equally by the partners. Jack's initial investment consisted of cash of $5,000 and a building with a fair market value of $105,000. Maya's initial investment consisted of $110,000 cash. For 2016, the first year of operations, the net loss for the partnership was $18,000. During the first year, neither partner withdrew any money from the partnership. The partnership has a...
On January 1, 2017, the dental partnership of Angela, Diaz, and Krause was formed when the...
On January 1, 2017, the dental partnership of Angela, Diaz, and Krause was formed when the partners contributed $54,000, $82,000, and $84,000, respectively. Over the next three years, the business reported net income and (loss) as follows: 2017 $ 94,000 2018 66,000 2019 (49,000 ) During this period, each partner withdrew cash of $17,000 per year. Krause invested an additional $6,000 in cash on February 9, 2018. At the time that the partnership was created, the three partners agreed to...
On January 1, 2017, the dental partnership of Angela, Diaz, and Krause was formed when the...
On January 1, 2017, the dental partnership of Angela, Diaz, and Krause was formed when the partners contributed $32,000, $60,000, and $62,000, respectively. Over the next three years, the business reported net income and (loss) as follows: 2017 $ 72,000 2018 44,000 2019 (27,000 ) During this period, each partner withdrew cash of $13,000 per year. Krause invested an additional $4,000 in cash on February 9, 2018. At the time that the partnership was created, the three partners agreed to...
On January 1, 2017, the dental partnership of Angela, Diaz, and Krause was formed when the...
On January 1, 2017, the dental partnership of Angela, Diaz, and Krause was formed when the partners contributed $50,000, $79,000, and $80,000, respectively. Over the next three years, the business reported net income and (loss) as follows: 2017 $ 90,000 2018 62,000 2019 (45,000 ) During this period, each partner withdrew cash of $13,000 per year. Krause invested an additional $7,000 in cash on February 9, 2018. At the time that the partnership was created, the three partners agreed to...
On January 1, 2017, the dental partnership of Angela, Diaz, and Krause was formed when the...
On January 1, 2017, the dental partnership of Angela, Diaz, and Krause was formed when the partners contributed $39,000, $67,000, and $69,000, respectively. Over the next three years, the business reported net income and (loss) as follows: 2017 $ 79,000 2018 51,000 2019 (34,000 ) During this period, each partner withdrew cash of $15,000 per year. Krause invested an additional $6,000 in cash on February 9, 2018. At the time that the partnership was created, the three partners agreed to...
1. Rick, Mary, and Joe formed a partnership on January 1, 2017,with investments of $100,000,...
1. Rick, Mary, and Joe formed a partnership on January 1, 2017, with investments of $100,000, $150,000, and $200,000, respectively. For division of income, they agreed to (1) interest of 10% of the beginning capital balance each year, (2) annual compensation of $10,000 to Mary, and (3) sharing the remainder of the income or loss in a ratio of 20% for Rick, and 40% each for Mary and Joe. Net income was $150,000 in 2017 and $180,000 in 2018.Each partner...
In January 2017, Crane Company, a newly formed company, issued 9500 shares of its $8 par...
In January 2017, Crane Company, a newly formed company, issued 9500 shares of its $8 par common stock for $13 per share. On July 1, 2017, Crane Company reacquired 950 shares of its outstanding stock for $10 per share. The acquisition of these treasury shares a. increased total stockholders' equity. b. decreased the number of issued shares. c. decreased total stockholders' equity. d. did not change total stockholders' equity.
Q#6) On January 1, 2017, the dental partnership of Angela, Diaz, and Krause was formed when...
Q#6) On January 1, 2017, the dental partnership of Angela, Diaz, and Krause was formed when the partners contributed $50,000, $79,000, and $80,000, respectively. Over the next three years, the business reported net income and (loss) as follows: 2017 $ 90,000 2018 62,000 2019 (45,000 ) During this period, each partner withdrew cash of $13,000 per year. Krause invested an additional $7,000 in cash on February 9, 2018. At the time that the partnership was created, the three partners agreed...
Allah, Ballah and Callah formed a Chartered Accountancy Firm in 2002. Their partnership agreement provided for...
Allah, Ballah and Callah formed a Chartered Accountancy Firm in 2002. Their partnership agreement provided for the following: Profits and Losses are to be shared as follows: Allah takes half, Ballah takes one-third and Callah takes the remainder. Interest is to be charged on the partners’ drawings and capital balances at 3.5%vand 5% per annum respectively. Allah, the administrative partner, is to be paid a monthly salary of GH¢2,400 Drawings by the partners were effected as follows: Allah         GH¢36,000...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT