Question
In: Accounting
On December 31, 2014, LBM Partnership’s accounts show the following. Answer the following questions under the...
On December 31, 2014, LBM Partnership’s accounts show the following. Answer the following questions under the different scenarios.
|
Partner |
Drawings |
Capital |
|
Lisa |
$23,000 |
$48,000 |
|
Bart |
14,000 |
30,000 |
|
Maggie |
10,000 |
25,000 |
Scenario1: Net income for the year is $30,000. Income is shared 60% to Lisa, 30% to Bart, and 10% to Maggie. How much is each partner’s share of the income?
|
Lisa |
|
|
Bart |
|
|
Maggie |
Scenario 2: Net income was $60,000 for the year. Lisa and Bart are each given a $15,000 salary allowance. The remainder is shared equally. Prepare a schedule showing the division of net income.
|
Lisa |
Bart |
Maggie |
Total |
|
|
Salary allowance |
||||
|
Remaining income |
||||
|
Total division of net income |
Scenario 3: Net income was $24,000 for the year. Each partner is given a 10% interest on beginning capital balances. Lisa is given a $10,000 salary allowance and $5,000 is given to both Bart and Maggie. The remainder is shared equally. Prepare a schedule showing the division of net income.
|
Lisa |
Bart |
Maggie |
Total |
|
|
Salary allowance |
||||
|
Interest allowance on capital |
||||
|
Total salaries and interest |
||||
|
Remaining deficiency |
||||
|
Total division of net income |
Prepare a partners' capital statement for the year under scenario 3.
|
Partners’ Capital Statement |
||||
|
Lisa |
Bart |
Maggie |
Total |
|
Solutions
Expert Solution
Scenario1: Net income for the year is $30,000. Income is shared 60% to Lisa, 30% to Bart, and 10% to Maggie. How much is each partner’s share of the income?
| Lisa | =30000*0.6 | 18000 |
| Bart | =30000*0.3 | 9000 |
| Maggie | =30000*0.1 | 3000 |
Scenario 2: Net income was $60,000 for the year. Lisa and Bart are each given a $15,000 salary allowance. The remainder is shared equally. Prepare a schedule showing the division of net income.
| Lisa | Bart | Maggie | Total | |
| Salary allowance | 15000 | 15000 | 15000 | 45000 |
| Remaining income 15000/3 | 5000 | 5000 | 5000 | 15000 |
| Total division of net income | 20000 | 20000 | 20000 | 60000 |
Net income was $24,000 for the year. Each partner is given a 10% interest on beginning capital balances. Lisa is given a $10,000 salary allowance and $5,000 is given to both Bart and Maggie. The remainder is shared equally. Prepare a schedule showing the division of net income.
| Lisa | Bart | Maggie | Total | |
| Salary allowance | 10000 | 5000 | 5000 | 20000 |
| Interest allowance on capital | 4800 | 3000 | 2500 | 10300 |
| Total salaries and interest | 14800 | 8000 | 7500 | 30300 |
| Remaining deficiency | 2000 | 2000 | 2000 | -6000 |
| Total division of net income | 16800 | 10000 | 9500 | 24300 |
Prepare a partners' capital statement for the year under scenario 3.
| Partners’ Capital Statement | ||||
| Lisa | Bart | Maggie | Total | |
| Beginning Capital | 48000 | 30000 | 25000 | 103000 |
| Add Investment | 0 | 0 | 0 | 0 |
| Less Drawings | 23000 | 14000 | 10000 | 47000 |
| Total division of net income | 16800 | 10000 | 9500 | 24300 |
| Capital At the End | 41800 | 26000 | 24500 | 92300 |
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