d $2,500 for cleaning up the lawn after the one-month selling period. BB, WW and FF decide that net income, if any will be allocated first by the $2,500 payment to FF and then by a 40% commission on individual sales. The balance will be distributed 75% to BB and 25% to WW. They agree that a cash box will complicate the matters and that all purchases and sales transactions will be out-of-pocket and the responsibility of the individual. Sale
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.
Can you please show the solution in good accounting form (preferrably in an excel) where it also shows what happens to every partners while solving for the requirement? Thank you so much for your help. It is appreciated.
PROBLEM:
BB, WW and FF agree to sell construction tools for a period of one month. BB agrees to construct a stand on the front of the lawn of FF. FF will be paid $2,500 for cleaning up the lawn after the one-month selling period.
BB, WW and FF decide that net income, if any will be allocated first by the $2,500 payment to FF and then by a 40% commission on individual sales. The balance will be distributed 75% to BB and 25% to WW. They agree that a cash box will complicate the matters and that all purchases and sales transactions will be out-of-pocket and the responsibility of the individual. Sales to BB, WW and FF are to be at cost, except that the ending inventory may be purchased at 50% of cost. All other sales are to be made at 100% mark-up on cost.
The activity of the joint operation is as follows:
| a. BB construct the stand on the front of the lawn at a cost of $10,000. |
| b. BB pays for $100,000 for various construction tools. FF pays $5,000 for permit to operate the concession or business. |
| c. BB purchases additional construction tools for $150,000, using $50,000 contributed by WW and $100,000 of personal money. |
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d.Sales for the period were as follows: BB $170,000 WW $260,000 FF $60,000 |
| e. FF pays $9,000 for office supplies and these are distributed equally between BB, WW, FF for their personal use at home. FF agrees to pay $5,000 for the stand. |
| f. The balance of construction tools inventory was taken by BB. |
Determine the amount to be received( paid) by BB during cash settlement.
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