On October 1, 2024, Andy, Barry, and Caleb formed the A, B and C partnership. Andy contributed $33,600; Barry, $47,600; and Caleb, $58,800. Andy will manage the store; Barry will work in the store three-quarters of the time; and Caleb will not work in the business. Requirements 1. Compute the partners' shares of profits and losses under each of the following plans: a. Net loss for the year ended September 30, 2025 is $43,000, and the partnership agreement allocates 50% of profits to Andy, 40% to Barry, and 10% to Caleb. The agreement does not discuss the sharing of losses. b. Net income for the year ended September 30, 2025, is $99,000. The first $35,000 is allocated on the basis of relative partner capital balances. The next $25,000 is based on service, with $15,000 going to Andy and $10,000 going to Barry. Any remainder is shared equally. 2. Using plan b, prepare the partnership statement of partners' equity. Assume Andy, Barry, and Caleb each withdrew $10,000 from the partnership during the year.
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
1,
and
formed the A, B and C
contributed
and
will manage the store;
will work in the store three-quarters of the time; and
will not work in the business.
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1.
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Compute the partners' shares of
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2.
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Using plan b, prepare the partnership statement of partners' equity. Assume
Andy,
Barry,
and
Caleb
each withdrew
$10,000
from the partnership during the year. |
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