A partnership begins its first year of operations with the following capital balances: Allegan, Capital Berrien, Capital $ 72,000 62,000 72,000 Kent, Capital According to the articles of partnership, all profits will be assigned as follows: Allegan will be awarded an annual salary of $20,000 with $10,000 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. The net loss for the first year of operations is $28,000, and net income for the subsequent year is $30,000. 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. ALLEGAN, BERRIEN, and KENT Statement of Partner's Capital For the Year One Allegan Berrien Kent Total Beginning capital Net loss Drawings $ 72,000 $ 62,000 $ (11,300) (6,780) (5,000) (5,000) 72,000 $ (4.520) (5.000) 206,000 (22,600) (15,000) Ending capital $ 55,700 $ 50,220 $ 62,480 $ 168,400 < Ending Capital Balance Year One Ending Capital Balance Year Two > A partnership begins its first year of operations with the following capital balances: Allegan, Capital Berrien, Capital $ 72,000 62,000 72,000 Kent, Capital According to the articles of partnership, all profits will be assigned as follows: ⚫ Allegan will be awarded an annual salary of $20,000 with $10,000 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. The net loss for the first year of operations is $28,000, and net income for the subsequent year is $30,000. 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 Опе Balance Year Two Prepare schedules that compute the balances in each partner's capital account at the end of Year Two of partnership operations. Note: Amounts to be deducted should be indicated with minus sign. Beginning capital Net income Drawings Ending capital ALLEGAN, BERRIEN, and KENT Statement of Partner's Capital For the Year Two Allegan Berrien Kent Total $ 0 0 0 $ 0 $ 0 $ 0 $ 0 < Ending Capital Balance Year One Ending Capital Balance Year Two > Show less▲

A partnership begins its first year of operations with the following capital balances: Allegan, Capital Berrien, Capital $ 72,000 62,000 72,000 Kent, Capital According to the articles of partnership, all profits will be assigned as follows: Allegan will be awarded an annual salary of $20,000 with $10,000 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. The net loss for the first year of operations is $28,000, and net income for the subsequent year is $30,000. 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. ALLEGAN, BERRIEN, and KENT Statement of Partner's Capital For the Year One Allegan Berrien Kent Total Beginning capital Net loss Drawings $ 72,000 $ 62,000 $ (11,300) (6,780) (5,000) (5,000) 72,000 $ (4.520) (5.000) 206,000 (22,600) (15,000) Ending capital $ 55,700 $ 50,220 $ 62,480 $ 168,400 < Ending Capital Balance Year One Ending Capital Balance Year Two > A partnership begins its first year of operations with the following capital balances: Allegan, Capital Berrien, Capital $ 72,000 62,000 72,000 Kent, Capital According to the articles of partnership, all profits will be assigned as follows: ⚫ Allegan will be awarded an annual salary of $20,000 with $10,000 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. The net loss for the first year of operations is $28,000, and net income for the subsequent year is $30,000. 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 Опе Balance Year Two Prepare schedules that compute the balances in each partner's capital account at the end of Year Two of partnership operations. Note: Amounts to be deducted should be indicated with minus sign. Beginning capital Net income Drawings Ending capital ALLEGAN, BERRIEN, and KENT Statement of Partner's Capital For the Year Two Allegan Berrien Kent Total $ 0 0 0 $ 0 $ 0 $ 0 $ 0 < Ending Capital Balance Year One Ending Capital Balance Year Two > Show less▲

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter4: Gross Income: Concepts And Inclusions

Section: Chapter Questions

Problem 43P

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