A partnership begins its first year of operations with the following capital balances: Allegan, Capital $60,000 Berrien, Capital 50,000 Kent, Capital 60,000 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 $8,000 per year. The net loss for the first year of operations is $24,000, and net income for the subsequent year is $29,000. 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 $60,000 Berrien, Capital 50,000 Kent, Capital 60,000 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 $8,000 per year. The net loss for the first year of operations is $24,000, and net income for the subsequent year is $29,000. 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.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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