A partnership begins its first year of operations with the following capital balances: Allegan, Capital Berrien, Capital Kent, Capital According to the articles of partnership, all profits will be assigned as follows: • Allegan will be awarded an annual salary of $16,000 with $8,000 assigned to Kent. The partners will be attributed interest equal to 10 percent of the capital balance as of the first day of the year. • The remainder will be assigned on a 5:2:3 basis, respectively. • Each partner is allowed to withdraw up to $5,000 per year. $ 92,000 82,000 92,000 The net loss for the first year of operations is $34,000, and net income for the subsequent year is $28,000. Each partner withdraws the maximum amount from the business each period. Required: Prepare schedules that compute the balances in each partner's capital account at the end of each of the first two years of partnership operations.
A partnership begins its first year of operations with the following capital balances: Allegan, Capital Berrien, Capital Kent, Capital According to the articles of partnership, all profits will be assigned as follows: • Allegan will be awarded an annual salary of $16,000 with $8,000 assigned to Kent. The partners will be attributed interest equal to 10 percent of the capital balance as of the first day of the year. • The remainder will be assigned on a 5:2:3 basis, respectively. • Each partner is allowed to withdraw up to $5,000 per year. $ 92,000 82,000 92,000 The net loss for the first year of operations is $34,000, and net income for the subsequent year is $28,000. Each partner withdraws the maximum amount from the business each period. Required: Prepare schedules that compute the balances in each partner's capital account at the end of each of the first two years of partnership operations.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:A partnership begins its first year of operations with the following capital balances:
Allegan, Capital
$ 92,000
Berrien, Capital
82,000
92,000
Kent, Capital
According to the articles of partnership, all profits will be assigned as follows:
Allegan will be awarded an annual salary of $16,000 with $8,000 assigned to Kent.
The partners will be attributed interest equal to 10 percent of the capital balance as of the first day of the year.
The remainder will be assigned on a 5:2:3 basis, respectively.
Each partner is allowed to withdraw up to $5,000 per year.
.
·
B
.
The net loss for the first year of operations is $34,000, and net income for the subsequent year is $28,000. Each partner withdraws
the maximum amount from the business each period.
Required:
Prepare schedules that compute the balances in each partner's capital account at the end of each of the first two years of partnership
operations.
Ending Capital Ending Capital
Balance Year Balance Year
One
Two
Prepare schedules that compute the balances in each partner's capital account at the end of Year One of partnership
operations.
Note: Amounts to be deducted should be indicated with minus sign.
Beginning capital
Net loss
Drawings
Ending capital
ALLEGAN, BERRIEN, and KENT
Statement of Partner's Capital
For the Year One
Allegan
SUPE
THEOFTHAVE
$0 $
Berrien
Kent
$
0 $0 $
SA
Total
0
10
0
0
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