Answered: driana Gonzalez and Sylvester Van Horne…

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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Question

driana Gonzalez and Sylvester Van Horne formed a partnership, dividing income as follows:

Annual salary allowance to Gonzalez of $25,000.
Interest of 5% on each partner’s capital balance on January 1.
Any remaining net income divided to Gonzalez and Van Horne, 2:1.

Gonzalez and Van Horne had $126,000 and $189,000, respectively, in their January 1 capital balances. Net income for the year was $115,000.

Required:

How much net income should be distributed to Gonzalez and Van Horne?
Gonzalez: $fill in the blank 1
Van Horne: $fill in the blank 2

I got this question wrong for Gonzalez I put 49500 and Van home 24750 wrong.

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement 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, and drawings of a partner.

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