Anna, Peter and Jim formed a limited liability partnership in 2019. In 2020, the beginning capital balance of each partner was $24,000, $36,000 and $60,000 respectively. During 2020, the company earned a net income of $63,000, and Anna withdrew $28,000 while Peter and Jim withdrew $36,000 and $39,000 respectively a) Calculate the amount of net income each partner will receive based on the following independent scenarios. (i) the earnings are divided equally. (ii) Anna receives 31%, Peter receives 42%, and Jim receives 27% of the earnings. (iii) the earnings are divided based on the partner's capital balance at the beginning of the year.
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.
Anna, Peter and Jim formed a limited liability
a) Calculate the amount of net income each partner will receive based on the following independent scenarios.
(i) the earnings are divided equally.
(ii) Anna receives 31%, Peter receives 42%, and Jim receives 27% of the earnings.
(iii) the earnings are divided based on the partner's capital balance at the beginning of the year.
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