McGill and Smyth have capital balances on January 1 of $41,000 and $34,000, respectively. The partnership income-sharing agreement provides for (1) annual salaries of $25,000 for McGill and $17,000 for Smyth, (2) interest at 12% on beginning capital balances, and (3) remaining income or loss to be shared 60% by McGill and 40% by Smyth. (a) (1) Prepare a schedule showing the distribution of net income, assuming net income is $85,000. (If an amount reduces the account balance then enter with a negative sign preceding the number or parenthesis, e.g. -15,000, (15,000).) Salary allowance Interest allowance Total salaries and interest DIVISION OF NET INCOME McGill Smyth $ Total $ Remaining income/ deficiency Total division of net income $ $ $ (2) Prepare a schedule showing the distribution of net income, assuming net income is $23,000. (If an amount reduces the account balance then enter with a negative sign preceding the number or parenthesis, e.g. -15,000, (15,000).) Salary allowance Interest allowance Total salaries and interest DIVISION OF NET INCOME McGill Smyth $ Remaining income/ deficiency Total division of net income $ $ $ Total
McGill and Smyth have capital balances on January 1 of $41,000 and $34,000, respectively. The partnership income-sharing agreement provides for (1) annual salaries of $25,000 for McGill and $17,000 for Smyth, (2) interest at 12% on beginning capital balances, and (3) remaining income or loss to be shared 60% by McGill and 40% by Smyth. (a) (1) Prepare a schedule showing the distribution of net income, assuming net income is $85,000. (If an amount reduces the account balance then enter with a negative sign preceding the number or parenthesis, e.g. -15,000, (15,000).) Salary allowance Interest allowance Total salaries and interest DIVISION OF NET INCOME McGill Smyth $ Total $ Remaining income/ deficiency Total division of net income $ $ $ (2) Prepare a schedule showing the distribution of net income, assuming net income is $23,000. (If an amount reduces the account balance then enter with a negative sign preceding the number or parenthesis, e.g. -15,000, (15,000).) Salary allowance Interest allowance Total salaries and interest DIVISION OF NET INCOME McGill Smyth $ Remaining income/ deficiency Total division of net income $ $ $ Total
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:McGill and Smyth have capital balances on January 1 of $41,000 and $34,000, respectively. The partnership income-sharing
agreement provides for (1) annual salaries of $25,000 for McGill and $17,000 for Smyth, (2) interest at 12% on beginning capital
balances, and (3) remaining income or loss to be shared 60% by McGill and 40% by Smyth.
(a)
(1)
Prepare a schedule showing the distribution of net income, assuming net income is $85,000. (If an amount reduces the account
balance then enter with a negative sign preceding the number or parenthesis, e.g. -15,000, (15,000).)
Salary allowance
Interest allowance
Total salaries and interest
DIVISION OF NET INCOME
McGill
Smyth
$
Total
$
Remaining income/
deficiency
Total division of net income
$
$
$
(2)
Prepare a schedule showing the distribution of net income, assuming net income is $23,000. (If an amount reduces the account
balance then enter with a negative sign preceding the number or parenthesis, e.g. -15,000, (15,000).)
Salary allowance
Interest allowance
Total salaries and interest
DIVISION OF NET INCOME
McGill
Smyth
$
Remaining income/
deficiency
Total division of net income
$
$
$
Total
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