On December 31, 2014, LBM Partnership’s accounts show the following. Answer the following questions under the different scenarios. Partner Drawings Capital Lisa $23,000 $48,000 Bart 14,000 30,000 Maggie 10,000 25,000 Scenario1: Net income for the year is $30,000. Income is shared 60% to Lisa, 30% to Bart, and 10% to Maggie. How much is each partner’s share of the income? Lisa Bart Maggie Scenario 2: Net income was $60,000 for the year. Lisa and Bart are each given a $15,000 salary allowance. The remainder is shared equally. Prepare a schedule showing the division of net income. Lisa Bart Maggie Total Salary allowance Remaining income Total division of net income Scenario 3: Net income was $24,000 for the year. Each partner is given a 10% interest on beginning capital balances. Lisa is given a $10,000 salary allowance and $5,000 is given to both Bart and Maggie. The remainder is shared equally. Prepare a schedule showing the division of net income. Lisa Bart Maggie Total Salary allowance Interest allowance on capital Total salaries and interest Remaining deficiency Total division of net income Prepare a partners' capital statement for the year under scenario 3 Partners’ Capital Statement Lisa Bart Maggie Total
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.
- On December 31, 2014, LBM
Partnership’s accounts show the following. Answer the following questions under the different scenarios.
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Partner |
Drawings |
Capital |
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Lisa |
$23,000 |
$48,000 |
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Bart |
14,000 |
30,000 |
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Maggie |
10,000 |
25,000 |
- Scenario1: Net income for the year is $30,000. Income is shared 60% to Lisa, 30% to Bart, and 10% to Maggie. How much is each partner’s share of the income?
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Lisa |
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Bart |
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Maggie |
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- Scenario 2: Net income was $60,000 for the year. Lisa and Bart are each given a $15,000 salary allowance. The remainder is shared equally. Prepare a schedule showing the division of net income.
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Lisa |
Bart |
Maggie |
Total |
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Salary allowance |
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Remaining income |
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Total division of net income |
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- Scenario 3: Net income was $24,000 for the year. Each partner is given a 10% interest on beginning capital balances. Lisa is given a $10,000 salary allowance and $5,000 is given to both Bart and Maggie. The remainder is shared equally. Prepare a schedule showing the division of net income.
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Lisa |
Bart |
Maggie |
Total |
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Salary allowance |
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Interest allowance on capital |
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Total salaries and interest |
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Remaining deficiency |
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Total division of net income |
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Prepare a partners' capital statement for the year under scenario 3
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Partners’ Capital Statement |
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Lisa |
Bart |
Maggie |
Total |
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