A partnership begins its first year of operations with the following capital balances: Allegan, Capital Berrien, Capital $ 56,000 46,000 56,000 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 $7,000 per year. The net loss for the first year of operations is $22,000, and net income for the subsequent year is $27,000. 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 One Balance Year 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 Beginning capital Net loss Drawings Ending capital For the Year One Allegan Berrien Kent Total $ 0 0 0 $ 0 $ 0 $ 0 $ 0 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 $ 56,000 46,000 56,000 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 $7,000 per year. The net loss for the first year of operations is $22,000, and net income for the subsequent year is $27,000. 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 One Balance Year 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 Beginning capital Net loss Drawings Ending capital For the Year One Allegan Berrien Kent Total $ 0 0 0 $ 0 $ 0 $ 0 $ 0 Ending Capital Balance Year One Ending Capital Balance Year Two >
Chapter4: Gross Income: Concepts And Inclusions
Section: Chapter Questions
Problem 43P
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Transcribed Image Text:A partnership begins its first year of operations with the following capital balances:
Allegan, Capital
Berrien, Capital
$ 56,000
46,000
56,000
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 $7,000 per year.
The net loss for the first year of operations is $22,000, and net income for the subsequent year is $27,000. 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
One
Balance Year
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
Beginning capital
Net loss
Drawings
Ending capital
For the Year One
Allegan
Berrien
Kent
Total
$
0
0
0
$
0
$
0 $
0
$
0
Ending Capital Balance Year One
Ending Capital Balance Year Two >
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