Question

In: Accounting

Tanner and Teresa share income and losses in a 2:1 ratio after allowing for salaries of...

Tanner and Teresa share income and losses in a 2:1 ratio after allowing for salaries of $43,500 to Tanner and $62,400 to Teresa. Net income of the partnership is $134,700. Income should be divided as follows:

a.Tanner, $62,700; Teresa, $72,000

b.Tanner, $77,000; Teresa, $57,700

c.Tanner, $57,700; Teresa, $77,000

d.Tanner, $58,700; Teresa, $76,000

Solutions

Expert Solution

Sol. Calculation of Net Profit of Partnership

Net Income of the Partnershipe less- Salary of Tanner Less- Salary of Teresa Net Profit Of Partnershite $ 134,700 $ 43,500 $ 62,400 $ 28,800 Profit distribution Ratio of Tanner and Teresa =2:1

Tanner's share of Profit = $28,800 x 2 /3 =$19,200

Teresa's share of Profit =$28,800 x1/ 3= $9,600

Income of Tanner =>

Salary + Tanner's share of Profit

= $43,500 + $19,200 =$ 62,700

Income of Teresa => Salary + Teresa's share of Profit

=$ 62,400 +$ 9,600= $72,000

So, the Income should be divided as

Tanner, $ 62,700; Teresa, $72,000

option (a.) is correct.


Related Solutions

3(12). Price and Phil share income and losses equally after allowing for salaries of $24,000 to...
3(12). Price and Phil share income and losses equally after allowing for salaries of $24,000 to Price and $30,000 to Phil. Net income for the partnership is $45,000. Income should be divided as a.Price, $22,500; Phil, $22,500. b.Price, $20,000; Phil, $25,000. c.Price, $27,000; Phil, $18,000. d.Price, $19,500; Phil, $25,500. 4(12). Arrow and Inlet share income and losses equally after allowing for salaries to Arrow of $27,000 and $33,000 to Inlet. Net income for the partnership is $75,000. If income should...
A, B and C share profits and losses by allowing A and C to receive salaries...
A, B and C share profits and losses by allowing A and C to receive salaries of P20,000 each, salary of P9,000 to B and a 25% bonus to B after bonus. The remainder is divided in a 5:2:3 ratio to A, B and C each, respectively. If A and C received a total of P30,000, how much is the share of C?
JK and MN are partners who share income and losses in the ratio of 3:2, respectively....
JK and MN are partners who share income and losses in the ratio of 3:2, respectively. On May 31, their capital balances were: JK $220,000 and MN $150,000. On that date, they agree to admit ST as a partner with a one quarter capital interest. ST invests $180,000 in the partnership under the bonus method: a.   What is JK’s capital balance after ST’s admittance? b.   What is MN’s capital balance after ST’s admittance c.   What capital amount is recorded for ST
Larry, Moe, and Curly who share in income and losses in the ratio of 2:3:5, decided...
Larry, Moe, and Curly who share in income and losses in the ratio of 2:3:5, decided to discontinue operations as of April 30, 2013, and liquidate their partnership. After the accounts were closed on April 30, 2013, the following trial balance was prepared: Larry, Moe, and Curly Post-Closing Trial Balance April 30, 2013 DEBIT Cash 8,000 Noncash Assets 107,800 CREDIT Liabilities 35,700 Larry, Capital 13,140 Moe, Capital 25,110 Curly, Capital 41,850 Totals: $115,800 $115,800 Between May 1 and May 18,...
Sand, Mell, and Rand are partners who share incomes and losses in a 1:4:5 ratio. After...
Sand, Mell, and Rand are partners who share incomes and losses in a 1:4:5 ratio. After lengthy disagreements among the partners and several unprofitable periods, the partners decided to liquidate the partnership. Before the liquidation, the partnership balance sheet showed the following: Cash $10,000 Total “other assets,” $106,000 Total liabilities, $88,000 Sand, Capital, $1,200 Mell, Capital, $11,700 Rand, Capital, $15,100 The “other assets” were sold for $ 85,000. Proceeds from the sale of other assets were used to payoff existing...
Aaron, Ben, and Carl are liquidating their business. They share income and losses in a 1:2:3...
Aaron, Ben, and Carl are liquidating their business. They share income and losses in a 1:2:3 ratio, respectively, and currently have capital balances of $15,000, $13,000, and $12,000, respectively. In addition, the partnership has $5,000 in cash, $15,000 in accounts payable, and $50,000 in noncash assets. Aaron and Ben are personally solvent, but Carl is not. Assuming that the noncash assets are sold for $20,000, prepare all liquidation entries in the journal provided without explanation.
189. Caitlin, Chris, and Molly are partners and share income and losses in a 3:4:3 ratio....
189. Caitlin, Chris, and Molly are partners and share income and losses in a 3:4:3 ratio. The partnership’s capital balances are Caitlin, $137,000; Chris, $97,000; and Molly, $117,000. Paul is admitted to the partnership on July 1 with a 20% equity and invests $77,000. The balance in Caitlin’s capital account immediately after Paul’s admission is: $139,580 $134,420 $77,000 $85,600 $137,000 195. Martin Company purchases a machine at the beginning of the year at a cost of $69,000. The machine is...
Turner, Roth, and Lowe are partners who share income and loss in a 2:3:5 ratio. After...
Turner, Roth, and Lowe are partners who share income and loss in a 2:3:5 ratio. After lengthy disagreements among the partners and several unprofitable periods, the partners decide to liquidate the partnership. Immediately before liquidation, the partnership balance sheet shows total assets, $164,400; total liabilities, $110,000; Turner, Capital, $5,700; Roth, Capital, $15,600; and Lowe, Capital, $33,100. The cash proceeds from selling the assets were sufficient to repay all but $44,000 to the creditors. Required: a. Calculate the loss from selling...
James and Bond are partners sharing profits and losses equally after allowing James a salary of...
James and Bond are partners sharing profits and losses equally after allowing James a salary of $ 20 000 per annum. On 1 January 2013 their capital and current account balances were as follows James    Bond $ $ Capital accounts 25 000    20 000 Current accounts 7500 5000 On 1 July 2013, the partners agree to the following revised terms of partnership. 1. James to transfer $ 6000 from his capital account to a Loan account on which...
Turner, Roth, and Lowe are partners who share income and loss in a 1:4:5 ratio. After...
Turner, Roth, and Lowe are partners who share income and loss in a 1:4:5 ratio. After lengthy disagreements among the partners and several unprofitable periods, the partners decide to liquidate the partnership. Immediately before liquidation, the partnership balance sheet shows total assets, $135,600; total liabilities, $86,000; Turner, Capital, $3,300; Roth, Capital, $14,400; and Lowe, Capital, $31,900. The cash proceeds from selling the assets were sufficient to repay all but $32,000 to the creditors. Required: a. Calculate the loss from selling...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT