Alex, Baker and Carlton have operated a small hardware store for a number of years as a partnership. At the beginning of 2021, the capital balances were as follows: Alex 82,000 Baker $62,000 Carlton $30,000 Due to a cash shortage, Alex invests an additional $6,000 in the business on April 1, 2021. Each partner withdraws just $700 cash each month. The partners have used the same method of allocating profits and losses since they started the business. -Each partner is given the following compensation for their work at the store: Alex $14,000 $24,000 $4,000 Baker Carlton -Each partner is credited with interest equal to 20% of the average monthly capital balance for the year without regard for normal drawings. -Any remaining profit or loss is allocated 3:2:5 to Alex, Baker and Carlton, respectively. The net income for 2021 is $24,000 Each partner withdraws the allotted amount each month. Prepare a schedule showing the distribution of 2021 net income to the partners following the method of allocating profits and losses used by the partners since they started the business.

Alex, Baker and Carlton have operated a small hardware store for a number of years as a partnership. At the beginning of 2021, the capital balances were as follows: Alex 82,000 Baker $62,000 Carlton $30,000 Due to a cash shortage, Alex invests an additional $6,000 in the business on April 1, 2021. Each partner withdraws just $700 cash each month. The partners have used the same method of allocating profits and losses since they started the business. -Each partner is given the following compensation for their work at the store: Alex $14,000 $24,000 $4,000 Baker Carlton -Each partner is credited with interest equal to 20% of the average monthly capital balance for the year without regard for normal drawings. -Any remaining profit or loss is allocated 3:2:5 to Alex, Baker and Carlton, respectively. The net income for 2021 is $24,000 Each partner withdraws the allotted amount each month. Prepare a schedule showing the distribution of 2021 net income to the partners following the method of allocating profits and losses used by the partners since they started the business.

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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