4. Humbolt Hardware Company is a partnership with net income of $84,000 and needs to split thisbetween partners Ethel Hardachre and Dave Vader. As Ethel Hardachre works full-time in thebusiness, they have an annual salary of $38,000 and contributed 1,092 of hours of work. The otherpartner, Dave Vader, put in 454.5 hours of work and has an annual salary of $29,250. The partnerssplit $12,100 of the net income as additional salary based upon the ratio of hours of work. Thepartners invested $20,500 (Ethel Hardachre) and $14,625 (Dave Vader). Each partner will receive 5%on their invested capital. Any residual net income or loss will be split based upon the ratio ofinvested capital. Prepare a schedule (showing calculations) of the split of net income or loss amongstthe partners.

Lets understand the basics. Partnership is an agreement between two or more person who works…

Answered: 4. Humbolt Hardware Company is a…

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter10: Partnerships: Formation, Operation, And Basis

Section: Chapter Questions

Problem 2BCRQ

See similar textbooks

Similar questions

Angel has a one-fourth and Brian has a three-fourths interest in a partnership that operates a toy manufacturing company. The partnership books disclose the following information for the current calendar year: Sales $235,000 Sales returns and allowances 10,000 Beginning Inventory 50,000 Purchases 50,000 Manufacturing cost of labor and supplies 105,000 Ending Inventory 61,000 Salaries 26,000 Guaranteed payments to partners($8,400/each) 16,800 Rent expense 17,000 Interest expense 550 Taxes expense 8,500 Bad debt expense 1,000 Repairs expense 3,000 Depreciation expense (tax depreciation) 2,470 Utilities expense 1,680 Net long-term capital gain (sold computer) 600 Compute the partnership ordinary income?
Johnson, Larson, and Kragen own an advertising agency that they operate as a partnership. The partnership agreement includes the following:a. Johnson receives a salary of $50,000.b. Larson receives a salary of $60,000.c. Kragen receives no salary but a bonus equal to 10% of income after the bonus.d. All partners are to receive 10% interest on their average capital invested. The average capital balances are $40,000, $25,000, and $145,000, respectively, for Johnson, Larson, and Kragen.e. Any residual amounts of profit are to be divided equally between the partners.1. Determine how $220,000 of income would be allocated.2. Determine how a loss of $34,000 would be allocated assuming a priority system for allocating losses is not followed.3. Determine how $132,000 of income is allocated among the partners assuming the following priority system: income should be allocated by first giving priority to salary, then bonus, then interest on invested capital, and then according to the profit and…
FB Manufacturing Company is a partnership among Yolando Gonzalez, Willies Todd, and Linda Walkers. The partnership contract states that partnership profits will be split equally among the three partners. During the current year Gonzalez withdrew $25,000, Todd withdrew $23,000, and Walker withdrew $35,000. net income of FB Manufacturing company amounted $180,000. a. calculates each partner's share of net income for the period.b. describes the effects, if any that partnership operations would have on the individual tax returns of the partnerc. prepare a statement of partners' equity for the year. Assume that partners’ capital accounts had beginning balances of $50,000, $60,000, and $40,000 for Gonzalez, Todd, and Walkers respectively.
On October 1, 2024, Apollo, Brett, and Clark formed the A, B and C partnership. Apollo contributed $27,300; Brett, $42,900; and Clark, $59,800. Apollo will manage the store; Brett will work in the store three-quarters of the time; and Clark will not work in the business. Read the requirements LOADING... . Requirement 1. Compute the partners' shares of profits and losses under each of the following plans: a. Net loss for the year ended September 30, 2025, is $55,000, and the partnership agreement allocates 70% of profits to Apollo, 15% to Brett, and 15% to Clark. The agreement does not discuss the sharing of losses. (Use parentheses or a minus sign for loss amounts. Complete all answer boxes. For amounts that are $0, make sure to enter "0" in the appropriate cell.) A, B and C Allocation of Profits and Losses Apollo Brett Clark Total a. Net income (loss) Capital allocation:…
Ivana, Eric, and Jerry form a partnership to develop land into commercial offices and rent them for a profit. Ivana contributes land with a fair market value of $1,200,000 and a $600,000 basis. Eric and Jerry each contribute $600,000 of cash. (a) Assume that Ivana is a 50% partner and that Eric and Jerry each are 25% partners. If the partnership earns $400,000 from operations in its first year and distributes the cash proportionately, does Ivana recognize any gain? (b) Pursuant to the written partnership agreement, the partnership pays Ivana $100,000 a year for six years, regardless of its income, as a guaranteed payment for capital. Alternatively, pursuant to the partnership agreement, the partnership allocates and distributes the first $100,000 of income exclusively to Ivana for six years. Assume that the highest applicable federal rate for all years equals 8%. Does Ivana recognize any gain?
Gloria Sanchez and Pierre Mason have a partnership in which they share income equally. They'recapital balances are $ 200,000 and $150,000 respectively. They agree that Mason will sell 1/4 of hispartnership interest to Michelle Rogers. Show the journal entry that must be made if the sales price is (a)$35,000? (b) $40,000?
three partners, John, Jim, and Alice form a partnership. John invests $27,500; Jim invests $10,700, and Alice invests $8,400. In addition, Jim performs specific management functions for which he is paid $2,000 from the partnership proceeds. if the partnership earns $176,000, how much will jim receive?
Greg and Harriet are partners in GH partnership. Greg originally contributed $50,000 while Harriet contributed $150,000. Greg works full-time while Harriet works part-time. During the year, GH Partnership earned $120,000 in net income. Determine how much of this $120,000 would be allocated to each partner under each of the following profit/loss sharing agreements. a. There is no agreement. Greg Harriet b. In the ratio of original capital investments. Greg Harriet c. In the ratio of time devoted to the business. Greg Harriet d. 10% of original capital investments and the remainder equally. Greg Harriet e. 10% of original capital investments, a salary allowance of $30,000 for Greg, and the remainder equally. Greg Harriet
A Lululime fashion business partnership has agreed that half of the annual profit be distributed in proportion to each partner's investment in the partnership, and that the other half be distributed in proportion to the total number of hours that each partner worked in the business during the year. In 2020 the profit of the company was $82,780. How the company should allocated this profit to its three investors if the amounts invested by Howe, Denver, and Laura are $68,000, $27,000, and $43,000, and their hours of work for the year were 420, 1170, and 1230, respectively?
Rajan, Rashmi and Richa are partners. The partnership agreement provides that partners will receive interest of 8% of their average capital balance and a salary allowance as follows: Rajan $50,000 Rashmi $40,000 Richa $40,000 Rajan, who manages the business, will receive a bonus of 25% of the profit in excess of $90 000 after partners’ interest and salary allowances have been deducted. Residual profits will be divided: Rajan ½ (half) Rashmi 1/3 (one third) Richa 1/6 (one sixth) During the current year their average capital balances were as follows: Rajan $250,000 Rashmi $150,000 Richa $90,000 Required Prepare a schedule showing how profit will be divided among the three partners if the profit for the year before the adjustment is $320,000.
1. Say, Alittle and Prayer are partners in a furniture company. following profit and loss distributions; Their partnership agreement provides for the > Say, Alittle and Prayer are to receive salaries of P40,000, P36,000, and P13,650, respectively. Say is to receive a bonus equal to 10% of income before the bonus. Each partner is to receive 10% interest on the weighted average capital balance. Withdrawals are considered to be reduction of capital for purposes of interest calculations. > Any remaining profits of losses are to be divided equally among the partners. Capital balance information for 2006 is as follows: Alittle 6,000 Say 10,000 1,000 2,000 1,000 Prayer 40,000 2,000 15,000 Jan. 1, 2006 Withdrawal 4/1/06 Investment 7/1/06 Withdrawal 10/1/06 4,000 2,000 Prepare distribution of profit or loss table showing the required profit that will allow Say to withdraw P65,000 from said profit. 2. Ashe Company was organized on January 1, 2010, with authorized capital of 100,000 shares of…
In a partnership business, Jack has an ownership of 60% and Teresa has an ownership of 40%. For growing the business, Jack contributed $7,000 and Teresa contributed $3,000 on July 1. Which of the following is true of this scenario? A Only the total contribution of $10,000 will be recorded B Individual contribution of $7,000 by Jack and $3,000 by Teresa will be recorded C Either the total contribution of $10,000 or the contribution in the ownership ratio will be recorded D 60% of Jack's contribution and 40% of Teresa's contribution will be recorded

SEE MORE QUESTIONS

Recommended textbooks for you

SWFT Corp Partner Estates Trusts

Accounting

ISBN:

9780357161548

Author:

Raabe

Publisher:

Cengage

CONCEPTS IN FED.TAX., 2020-W/ACCESS

Accounting

ISBN:

9780357110362

Author:

Murphy

Publisher:

CENGAGE L

SWFT Corp Partner Estates Trusts

Accounting

ISBN:

9780357161548

Author:

Raabe

Publisher:

Cengage

CONCEPTS IN FED.TAX., 2020-W/ACCESS

Accounting

ISBN:

9780357110362

Author:

Murphy

Publisher:

CENGAGE L

SEE MORE TEXTBOOKS