Noel and Emily agreed to divide partnership income as follows: a. Noel and Emily will be paid USD60,000 and USD30,000, respectively. b. In addition, the partners receive a 10% interest rate on their initial capital balances. c. The remaining income is to be divided in a 3:2 ratio between Noel and Emily. Noel and Emily's starting capital balances in 2013 are USD300,000 and USD120,000, respectively. Throughout the year, Noel contributed USD50,000 in additional capital and made a USD10,000 drawing, while Emily contributed USD20,000 in additional capital and made a USD10,000 drawing. What was the partnership's net income in 2013 if Noel's capital account had a net increase of USD120,000 in 2013?
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is 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, drawings of a partner, etc.
Noel and Emily agreed to divide partnership income as follows: a. Noel and Emily will be paid USD60,000 and USD30,000, respectively. b. In addition, the partners receive a 10% interest rate on their initial capital balances. c. The remaining income is to be divided in a 3:2 ratio between Noel and Emily. Noel and Emily's starting capital balances in 2013 are USD300,000 and USD120,000, respectively. Throughout the year, Noel contributed USD50,000 in additional capital and made a USD10,000 drawing, while Emily contributed USD20,000 in additional capital and made a USD10,000 drawing. What was the partnership's net income in 2013 if Noel's capital account had a net increase of USD120,000 in 2013?
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