Diala and Tamer, partners in DT Company, have capital balances on January 1, 2016 of $72,000 and $48,000 respectively. The net income for the year is $86,000. The partnership income-sharing agreement indicates: 1. Annual Salaries of $24,000 for Diala and $16,000 for Tamer. 2. Interest of 10% on beginning capital balances for all partners. 3. Remaining income or loss to be shared in accordance with the ratio of the partners' original capital investments. Diala ratio= 72,000/(72,000+48,000)=0.6=60% Tamer=48,000/(72,000+48,000)=0.4=40% Instructions: (a) Prepare a schedule showing the distribution of net income for the partnership. (b)Prepare the journal entry to record the division of net income.
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.
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