Mike and Rachel form M&R Partnership. Mike invests $40,000 cash and Rachel invests $60,000 cash. The partners agree to share income as follows: Mike gets a salary allowance of $5,000 per year and Rachel gets a salary allowance of $9,000 per year; both get an annual interest allowance of 10% on their initial investment; and any remaining balance is shared equally. Net income for the year is $30,000. Also, Mike withdrew $1,000 cash from the partnership and Rachel withdrew $2,000. Prepare a statement of partners’ equity for the year ended December 31.
Mike and Rachel form M&R Partnership. Mike invests $40,000 cash and Rachel invests $60,000 cash. The partners agree to share income as follows: Mike gets a salary allowance of $5,000 per year and Rachel gets a salary allowance of $9,000 per year; both get an annual interest allowance of 10% on their initial investment; and any remaining balance is shared equally. Net income for the year is $30,000. Also, Mike withdrew $1,000 cash from the partnership and Rachel withdrew $2,000. Prepare a statement of partners’ equity for the year ended December 31.
Chapter10: Partnerships: Formation, Operation, And Basis
Section: Chapter Questions
Problem 2BCRQ
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Mike and Rachel form M&R
The partners agree to share income as follows: Mike gets a salary allowance of $5,000 per year and Rachel
gets a salary allowance of $9,000 per year; both get an annual interest allowance of 10% on their initial
investment; and any remaining balance is shared equally. Net income for the year is $30,000. Also, Mike
withdrew $1,000 cash from the partnership and Rachel withdrew $2,000. Prepare a statement of partners’
equity for the year ended December 31.
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