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 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...

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...

Sharon and Rebecca agreed to combine their businesses and formed a partnership on 1 July 2017....

Sharon and Rebecca agreed to combine their businesses and formed a partnership on 1 July 2017. The fair value and the carrying amount of the assets contributed by each partner, and the liabilities assumed by the partnership are shown below: The partners were entitled to 5 per cent interest on the initial capital. Rebecca ran the partnership and received a salary of $70,000. The profit for the year ended 30 June 2018 was $200,000 before providing for interest and salary....

Subjects