McGill and Smyth have capital balances on January 1 of $50,000 and $40,000, respectively. The partnership income-sharing agreement provides for (1) annual salaries of $22,000 for McGill and $13,000 for Smyth, (2) interest at 10% on beginning capital balances, and (3) remaining income or loss to be shared 60% by McGill and 40% by Smyth. Prepare a schedule showing the distribution of net income, assuming net income is $50,000

McGill and Smyth have capital balances on January 1 of $50,000 and $40,000, respectively. The partnership income-sharing agreement provides for (1) annual salaries of $22,000 for McGill and $13,000 for Smyth, (2) interest at 10% on beginning capital balances, and (3) remaining income or loss to be shared 60% by McGill and 40% by Smyth. Prepare a schedule showing the distribution of net income, assuming net income is $50,000

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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Ries, Bax, and Thomas invested $40,000, $56,000, and $64,000, respectively, in a partnership. During its first calendar year, the firm earned $418, 200. Required: Prepare the entry to close the firm's Income Summary account as of its December 31 year-end and to allocate the $418, 200 net income under each of the following separate assumptions. 2. The partners agreed to share income and loss in the ratio of their beginning capital investments.
The partnership agreement of Jones, King, and Lane provides for the annual allocation of the business's profit or loss in the following sequence: Jones, the managing partner, receives a bonus equal to 15 percent of the business’s profit. Each partner receives 14 percent interest on average capital investment. Any residual profit or loss is divided equally. The average capital investments for 2021 were as follows: Jones $ 100,000 King 200,000 Lane 300,000 The partnership earned $48,000 net income for 2021. Prepare a schedule showing how the 2021 net income should be allocated to the partners. (Loss amounts should be indicated with a minus sign.)
Farmer and Taylor formed a partnership with capital contributions of $245,000 and $295,000, respectively. Their partnership agreement calls for Farmer to receive a $79,000 per year salary allowance. The remaining income or loss is to be divided equally. Assuming net income for the current year is $189,000, the journal entry to allocate net income is: dit Fo Debit Income Summary, $189,000; Credit Farmer, Capital, $94,500; Credit Taylor, Capital, $94,500. Debit Income Summary, $189,000; Credit Farmer, Capital, $166,000; Credit Taylor, Capital, $23,000. Debit Income Summary, $189,000; Credit Farmer, Capital, $48,840; Credit Taylor, Capital, $140,160. Debit Income Summary, $189,000; Credit Farmer, Capital, $134,000; Credit Taylor, Capital, $55,000. Debit Income Summary, $189,000; Credit Taylor, Capital, $134,000; Credit Farmer, Capital, $55,000.
Ehrlich (beginning capital, $110,000) and Haar (beginning capital $85,000) are partners. During 2022 the partnership earned net income of $60,000. Ehrlich made drawings of $25,000 while Haar made drawings of $10,000. Instructions Assume the partnership income-sharing agreement calls for income to be divided with a salary of $22,000 to Ehrlich and $25,000 to Haar, interest of 10% on beginning capital, and the remainder divided 70%-30%. Prepare a schedule of the income allocation to each partner. Prepare the journal entry to record the allocation of net income. Compute Ehrlich's ending capital balance
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…
A partnership began its first year of operations with the following capital balances: Young, Capital $ 143,000 Eaton, Capital $ 104,000 Thurman, Capital $ 143,000 The Articles of Partnership stipulated that profits and losses be assigned in the following manner: Young was to be awarded an annual salary of $26,000 and $13,000 salary was to be awarded to Thurman. Each partner was to be attributed with interest equal to 10% of the capital balance as of the first day of the year. • The remainder was to be assigned on a 5:2:3 basis to Young, Eaton, and Thurman, respectively. • Each partner withdrew $13,000 per year. Assume that the net loss for the first year of operations was $26,000 with net income of $52,000 in the second year. What was the balance in Young's Capital account at the end of the first year? ● ● Multiple Choice O $120,900 $118,300
The partnership agreement of Jones, King, and Lane provides for the annual allocation of the business's profit or loss in the following sequence: • Jones, the managing partner, receives a bonus equal to 15 percent of the business's profit. • Each partner receives 10 percent interest on average capital investment. Any residual profit or loss is divided equally. The average capital investments for 2021 were as follows: Jones King Lane The partnership earned $84,000 net income for 2021. Prepare a schedule showing how the 2021 net income should be allocated to the partners. (Loss amounts should be indicated with a minus sign.) Net income Bonus Interest $ 190,000 380,000 570,000 Remainder to allocate Total allocation Jones King Lane Total
Alaa, Sami and Ray, the partners in ASR Company, have capital balances on January 1, 2020 of s110,000, S77,000 and S33,000 respectively. The net income for the year is $25,000. The partnership income-sharing agreement indicates: 1. Annual salaries of S7,000 for Alaa, $5,500 for Sami, and $4,500 for Ray. 2. Interest of 7% on beginning capital balances for all partners. 3. Remaining income or loss to be shared based on the partner's beginning capital ratios
heng invested $108,000 and Murray invested $208,000 in a partnership. They agreed to share incomes and losses by allowing a $62,000 per year salary allowance to Zheng and a $42,000 per year salary allowance to Murray, plus an interest allowance on the partners' beginning-year capital investments at 10%, with the balance to be shared equally. Assuming net income for the current year is $109,000, the journal entry to allocate net income is: Debit Income Summary, $109,000; Credit Zheng, Capital, $54,500, Credit Murray, Capital, $54,500. Debit Income Summary, $109,000; Credit Zheng, Capital, $36,600, Credit Murray, Capital, $72,400. Debit Zheng, Capital, $59,500, Debit Murray, Capital, $49,500; Credit Income Summary, $109,000; Debit Income Summary, $109,000; Credit Zheng, Capital, $59,500, Credit Murray, Capital, $49,500. Debit Income Summary, $109,000; Credit Zheng, Capital, $42,900, Credit Murray, Capital, $66,100.
Coburn (beginning capital, $56,000) and Webb (beginning capital $92,000) are partners. During 2022, the partnership earned net income of $69,000, and Coburn made drawings of $17,000 while Webb made drawings of $26,000. Assume the partnership income-sharing agreement calls for income to be divided with a salary of $37,000 to Coburn and $32,000 to Webb, interest of 12% on beginning capital, and the remainder divided 50%–50%. Prepare the journal entry to record the allocation of net income.
A and B are in partnership sharing profits and losses in the ratio 3:2 respectively. Profit for the year was $86,500. The partners' capital and current account balances at the beginning of the year were as follows: A B $ Current accounts 5,750CR 1,200CR Capital accounts 10,000CR 8,000CR A's drawings during the year were $4,300, and B's were $2,430. What should A's current account balance be at the end of the year? $51,900 B 57,650 $53,350 D $61,950
Reed and Sioux established a partnership and divided their profits as follows: Emerson will receive an annual salary allowance of $41,200 and a 10% interest rate on each partner's capital as of January 1. Equal distribution of any residual net profits. The capital balances at January 1 for Reed and Sioux were $34,000 and $146,000, respectively. $232,800 was the net profit for the year. What portion of the net income should be given to Dakota? [Fill in the blank] 1