Alford, Beeson, and Carlton have operated a coffee shop for a number of years as a partnership. At the beginning of 2024, capital balances were as follows: Alford Beeson Carlton Due to a cash shortage, Alford invests an additional $10,000 in the business on April 1, 2024. Each partner is allowed to withdraw $600 cash each month. $ 94,000 74,000 20,000 The partners have used the same method of allocating profits and losses since the business's inception: • Each partner is given the following compensation allowance for work done in the business: Alford, $14,000; Beeson, $30,000; and Carlton, $4,000. • Each partner is credited with interest equal to 20 percent of the average monthly capital balance for the year without regard for normal drawings. • Any remaining profit or loss is allocated 5:3.2 to Alford, Beeson, and Carlton, respectively. The net income for 2024 is $27,000. Each partner withdraws the allotted amount each month. Required: Prepare a schedule showing calculations for the partners' 2024 ending capital balances. Note: Amounts to be deducted should be indicated with minus sign.
Alford, Beeson, and Carlton have operated a coffee shop for a number of years as a partnership. At the beginning of 2024, capital balances were as follows: Alford Beeson Carlton Due to a cash shortage, Alford invests an additional $10,000 in the business on April 1, 2024. Each partner is allowed to withdraw $600 cash each month. $ 94,000 74,000 20,000 The partners have used the same method of allocating profits and losses since the business's inception: • Each partner is given the following compensation allowance for work done in the business: Alford, $14,000; Beeson, $30,000; and Carlton, $4,000. • Each partner is credited with interest equal to 20 percent of the average monthly capital balance for the year without regard for normal drawings. • Any remaining profit or loss is allocated 5:3.2 to Alford, Beeson, and Carlton, respectively. The net income for 2024 is $27,000. Each partner withdraws the allotted amount each month. Required: Prepare a schedule showing calculations for the partners' 2024 ending capital balances. Note: Amounts to be deducted should be indicated with minus sign.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
Question
Transcribed Image Text:Alford, Beeson, and Carlton have operated a coffee shop for a number of years as a partnership. At the beginning of 2024, capital
balances were as follows:
Alford
Beeson
Carlton
Due to a cash shortage, Alford invests an additional $10,000 in the business on April 1, 2024.
Each partner is allowed to withdraw $600 cash each month.
The partners have used the same method of allocating profits and losses since the business's inception:
• Each partner is given the following compensation allowance for work done in the business: Alford, $14,000; Beeson, $30,000; and
Carlton, $4,000.
$ 94,000
74,000
20,000
• Each partner is credited with interest equal to 20 percent of the average monthly capital balance for the year without regard for
normal drawings.
• Any remaining profit or loss is allocated 5.3.2 to Alford, Beeson, and Carlton, respectively. The net income for 2024 is $27,000.
Each partner withdraws the allotted amount each month.
Required:
Prepare a schedule showing calculations for the partners' 2024 ending capital balances.
Note: Amounts to be deducted should be indicated with minus sign.
Beginning balances
Additional contribution
Net income
Drawings
Ending capital balances
Answer is not complete.
ALFORD, BEESON, and CARLTON
Statement of Partners' Capital
For the Year Ending December 31, 2024
Alford
Beeson
$ 94,000✔ S
10,000✔
$
7,200 x
111,200 S
74,000 $
0✔
7,200 x
81,200
5
Carlton
20,000
0✔
7,200
27,200
$
Totals
188,000
10,000
0
21,600
$ 219,600
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