Entries for Allocation of Net IncomeDanny Spurlock and Tracy Wilson decided to form a partnership on July 1, 20-1. Spurlock invested $100,000 and Wilson invested $25,000. For the fiscal year ended June 30, 20-2, a net income of $79,000 was earned. Determine the amount of net income that Spurlock and Wilson would receive under each of the following independent assumptions:Income to be allocated $fill in the blank 1 SpurlockWilsonTotal1. There is no agreement concerning the distribution of net income.$fill in the blank 2$fill in the blank 3$fill in the blank 42. Each partner is to receive 10% interest on their original investment. The remaining net income is to be divided equally.$fill in the blank 5$fill in the blank 6$fill in the blank 73. Spurlock and Wilson are to receive a salary allowance of $33,000 and $24,000, respectively.The remaining net income is to be divided equally.$fill in the blank 8$fill in the blank 9$fill in the blank 104. Each partner is to receive 10% interest on their original investment.Spurlock and Wilson are to receive a salary allowance of $33,000 and $24,000, respectively.The remaining net income is to be divided as follows: Spurlock, 75% and Wilson, 25%.

Partnership is a formal agreement between two or more people to manage and operate a business and…

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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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Entries for Allocation of Net Income

Danny Spurlock and Tracy Wilson decided to form a partnership on July 1, 20-1. Spurlock invested $100,000 and Wilson invested $25,000. For the fiscal year ended June 30, 20-2, a net income of $79,000 was earned. Determine the amount of net income that Spurlock and Wilson would receive under each of the following independent assumptions:

Income to be allocated			$fill in the blank 1
	Spurlock	Wilson	Total
1. There is no agreement concerning the distribution of net income.	$fill in the blank 2	$fill in the blank 3	$fill in the blank 4
2. Each partner is to receive 10% interest on their original investment. The remaining net income is to be divided equally.	$fill in the blank 5	$fill in the blank 6	$fill in the blank 7
3. Spurlock and Wilson are to receive a salary allowance of $33,000 and $24,000, respectively. The remaining net income is to be divided equally.	$fill in the blank 8	$fill in the blank 9	$fill in the blank 10
4. Each partner is to receive 10% interest on their original investment. Spurlock and Wilson are to receive a salary allowance of $33,000 and $24,000, respectively. The remaining net income is to be divided as follows: Spurlock, 75% and Wilson, 25%.

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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