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BROWN AND STELLA HAVE A PARTNERSHIP AGREEMENT WHICH INCLUDES THE FOLLOWING CONDITIONS REGARDING SHARING NET INCOME...

BROWN AND STELLA HAVE A PARTNERSHIP AGREEMENT WHICH INCLUDES THE FOLLOWING CONDITIONS REGARDING SHARING NET INCOME OR NET LOSS:

A SALARY ALLOWANCE OF $54 000 TO BROWN AND $36 000 TO STELLA.
AN INTEREST ALLOWANCE OF 10% ON CAPITAL BALANCES AT THE BEGINNING OF THE YEAR.
ANY REMAINDER TO BE DIVIDED 60% TO BROWN AND 40% TO STELLA.

THE CAPITAL BALANCE ON JANUARY 1, 2019, FOR BROWN AND STELLA WAS $90 000 AND $120 000, RESPECTIVELY. DURING THE YEAR 2019, BROWN AND STELLA WITHDREW EACH FROM THEIR CAPITAL ACCOUNTS $4000.

INSTRUCTIONS: COMPUTE EACH PARTNER CAPITAL BALANCES AT THE END OF 2019, UNDER THE FOLLOWING INDEPENDENT CONDITIONS:

1) NET INCOME IS $130 000. SHOW ALL SUPPORTING CALCULATIONS.

2) NET INCOME IS $90 000. SHOW ALL SUPPORTING CALCULATIONS.

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ekkarill92 answered 2 years ago
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