### Partnership Income Allocation**Scenario:**Ramer and Knox began a partnership by investing $72,000 and $102,000, respectively. The partners agreed to share net income and loss by giving annual salary allowances of $56,000 to Ramer and $44,800 to Knox, 10% interest allowances on their investments, and any remaining balance shared equally. (*Enter all allowances as positive values. Enter losses as negative values.*)#### Requirements:1. Determine each partner's share given a first-year net income of $110,800.2. Determine each partner's share given a first-year net loss of $28,800.**Instructions:**Complete this question by entering your answers in the tabs below.### Question SolutionThere are two parts to the requirement: “Required 1” and “Required 2.” The provided image shows “Required 2,” which focuses on determining each partner’s share given a first-year net loss of $28,800.Below is the detailed explanation and table to fill in:#### Determine Each Partner’s Share Given a First-Year Net Loss of $28,800.##### Allocation of Partnership Income| **Allocation Component** | **Ramer** | **Knox** | **Total** ||----------------------------------|-----------|----------|--------------|| **Net Income (loss)** | | | $ (28,800) || **Salary allowances** | | | $ 0 || **Balance of income (loss)** | | | $ (28,800) || **Interest allowances** | | | $ 0 || **Balance of income (loss)** | | | $ (28,800) || **Balance allocated equally** | | | $ 0 || **Balance of income (loss)** | | | $ (28,800) || **Shares of the partners** | | | __**TBD**__ |**Explanation:**1. **Net Income (loss):** The total net loss for the partnership in the first year is $28,800.2. **Salary allowances:** Since it is a loss situation, no salary allowances will be given. Hence, this component remains zero.3. **Balance of income (loss):** This remains the total loss of $28,800 ### Partnership Income Allocation**Scenario:**Ramer and Knox began a partnership by investing $72,000 and $102,000, respectively. They agreed to share net income or loss by:- Providing annual salary allowances of $56,000 to Ramer and $44,800 to Knox.- Allowing 10% interest on their investments.- Sharing the remaining balance equally.**Instructions for Calculation:**1. **Determine each partner's share for a first-year net income of $110,800.**2. **Determine each partner's share for a first-year net loss of $28,800.****Note:**- Enter all allowances as positive values.- Enter losses as negative values.### Step-by-Step Allocation (Net Income: $110,800)In the case of a first-year net income of $110,800, the allocation is as follows:**1. Salary Allowances:**- Ramer: $56,000- Knox: $44,800- Total Salary Allowances: $100,800**2. Interest Allowances:**- Ramer (10% of $72,000): $5,600- Knox (10% of $102,000): $4,800- Total Interest Allowances: $10,400**3. Balance of Income to be Allocated Equally:**- Total Net Income: $110,800- Total Allowances: $100,800 (salaries) + $10,400 (interest) = $111,200- Balance of Income (Loss): $110,800 - $111,200 = -$400Since the balance of income is negative, this amount will be allocated equally between Ramer and Knox.**4. Shares of Partners:**- Equal Allocation of Remaining Balance: -$400 / 2 = -$200 each- Ramer's Final Share: $56,000 (salary) + $5,600 (interest) - $200 = $61,400- Knox's Final Share: $44,800 (salary) + $4,800 (interest) - $200 = $49,400To summarize, for a first-year net income of $110,800, Ramer receives $61,400 and Knox receives $49,400.Below is a detailed table illustrating this allocation:| **Allocation of Partnership Income** | **Ramer

mer and Knox began a partnership by investing $72,000 and $102,000, respectively. The partners agreed to share net income and ss by giving annual salary allowances of $56,000 to Ramer and $44,800 to Knox, 10% interest allowances on their investments, and y remaining balance shared equally. (Enter all allowances as positive values. Enter losses as negative values.) equired: Determine each partner's share given a first-year net income of $110,800. Determine each partner's share given a first-year net loss of $28,800. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine each partner's share given a first-year net loss of $28,800. Allocation of Partnership Income Ramer Knox Total $ (28,800) et Income (loss) alary allowances 0 alance of income (loss) nterest allowances 0 alance of income (loss) Balance allocated equally alance of income (loss) Shares of the partners 0

mer and Knox began a partnership by investing $72,000 and $102,000, respectively. The partners agreed to share net income and ss by giving annual salary allowances of $56,000 to Ramer and $44,800 to Knox, 10% interest allowances on their investments, and y remaining balance shared equally. (Enter all allowances as positive values. Enter losses as negative values.) equired: Determine each partner's share given a first-year net income of $110,800. Determine each partner's share given a first-year net loss of $28,800. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine each partner's share given a first-year net loss of $28,800. Allocation of Partnership Income Ramer Knox Total $ (28,800) et Income (loss) alary allowances 0 alance of income (loss) nterest allowances 0 alance of income (loss) Balance allocated equally alance of income (loss) Shares of the partners 0

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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