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 $18,000 with $9,000 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 $10,000 per year. $ 58,000 48,000 58,000 The net loss for the first year of operations is $22,000, 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
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 $18,000 with $9,000 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 $10,000 per year. $ 58,000 48,000 58,000 The net loss for the first year of operations is $22,000, 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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![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 $18,000 with $9,000 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 $10,000 per year.
The net loss for the first year of operations is $22,000, and net income for the subsequent year is $28,000. Each partner withdraws
the maximum amount from the business each period.
$ 58,000
48,000
58,000
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
$
$
58,000 $
(10,000)
48,000 $
< Ending Capital Balance Year One
Berrien
48,000
(10,000)
Kent
38,000 $
58,000 $
(10,000)
(30,000)
134,000
Ending Capital Balance Year Two >
Total
48,000 $
164,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F748c9d4a-ae17-4b3a-82a7-0c6c0abf2f9f%2F1c320782-3c0a-41cb-b9c8-079bd5c05143%2Fq0vybw_processed.png&w=3840&q=75)
Transcribed Image Text: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 $18,000 with $9,000 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 $10,000 per year.
The net loss for the first year of operations is $22,000, and net income for the subsequent year is $28,000. Each partner withdraws
the maximum amount from the business each period.
$ 58,000
48,000
58,000
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
$
$
58,000 $
(10,000)
48,000 $
< Ending Capital Balance Year One
Berrien
48,000
(10,000)
Kent
38,000 $
58,000 $
(10,000)
(30,000)
134,000
Ending Capital Balance Year Two >
Total
48,000 $
164,000
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