Kate DeLeo and Joe Desmond decided to form a partnership on January 1. DeLeo invested $50,000 and Desmond invested $30,000. On December 31, the end of the fiscal year, a net income of $100,000 was earned. Determine the amount of net income that DeLeo and Desmond would receive under each of the following independent assumptions:Net income $fill in the blank 1Income to be allocatedDeLeoDesmondTotala. There is no agreement concerning the distribution of net income.$fill in the blank 2$fill in the blank 3$fill in the blank 4b. Each partner is to receive 10% on their original investment, and the remainder divided equally.$fill in the blank 5$fill in the blank 6$fill in the blank 7c. DeLeo and Desmond are to receive a salary allowance of $35,000 and $45,000 respectively, and the remainder divided equally.$fill in the blank 8$fill in the blank 9$fill in the blank 10d. Each partner is to receive 10% on their original investment, DeLeo and Desmond are to receive a salary allowance of $30,000 and $40,000 respectively, and the remainder divided as follows: 60% to DeLeo and 40% to Desmond.

Net Income: After all of a company's expenses have been deducted, net income is the remaining…

Answered: Kate DeLeo and Joe Desmond decided to…

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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Kate DeLeo and Joe Desmond decided to form a partnership on January 1. DeLeo invested $50,000 and Desmond invested $30,000. On December 31, the end of the fiscal year, a net income of $100,000 was earned. Determine the amount of net income that DeLeo and Desmond would receive under each of the following independent assumptions:

Net income			$fill in the blank 1
Income to be allocated	DeLeo	Desmond	Total
a. 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
b. Each partner is to receive 10% on their original investment, and the remainder divided equally.	$fill in the blank 5	$fill in the blank 6	$fill in the blank 7
c. DeLeo and Desmond are to receive a salary allowance of $35,000 and $45,000 respectively, and the remainder divided equally.	$fill in the blank 8	$fill in the blank 9	$fill in the blank 10
d. Each partner is to receive 10% on their original investment, DeLeo and Desmond are to receive a salary allowance of $30,000 and $40,000 respectively, and the remainder divided as follows: 60% to DeLeo and 40% to Desmond.

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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