Paddison and Wager have formed a partnership. During their first year of operations, the partnership earned $160,000. Their-profit-and-loss-sharing agreement states that, first, each partner will receive 20% of their capital balances. The second level is based on services, with $10,000 to Paddison and $20,000 to Wager. The remainder then will be shared 4:1 between Paddison and Wager, respectively. Read the requirements. Requirement 1. Calculate the amount of income each partner will receive under their profit-and-loss-sharing agreement assuming Paddison's capital balance is $91,000 and Wager's capital balance is $91,000. (Complete all answer boxes. For amounts that are $0, make sure to enter "0" in the appropriate column.) Paddison Wager Total Net income (loss) Requirements Capital allocation: Paddison 1. Calculate the amount of income each partner will receive under their profit-and-loss-sharing agreement assuming Paddison's capital balance is $91,000 and Wager's capital balance is $91,000. Wager Salary allowance: 2. Journalize the entry to close the Income Summary account for the year. Paddison Wager Total salary and capital allocation Print Done Net income (loss) remaining for allocation Share of remainder: Paddison Wager
Paddison and Wager have formed a partnership. During their first year of operations, the partnership earned $160,000. Their-profit-and-loss-sharing agreement states that, first, each partner will receive 20% of their capital balances. The second level is based on services, with $10,000 to Paddison and $20,000 to Wager. The remainder then will be shared 4:1 between Paddison and Wager, respectively. Read the requirements. Requirement 1. Calculate the amount of income each partner will receive under their profit-and-loss-sharing agreement assuming Paddison's capital balance is $91,000 and Wager's capital balance is $91,000. (Complete all answer boxes. For amounts that are $0, make sure to enter "0" in the appropriate column.) Paddison Wager Total Net income (loss) Requirements Capital allocation: Paddison 1. Calculate the amount of income each partner will receive under their profit-and-loss-sharing agreement assuming Paddison's capital balance is $91,000 and Wager's capital balance is $91,000. Wager Salary allowance: 2. Journalize the entry to close the Income Summary account for the year. Paddison Wager Total salary and capital allocation Print Done Net income (loss) remaining for allocation Share of remainder: Paddison Wager
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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.
Question
Transcribed Image Text:Paddison and Wager have formed a partnership. During their first year of operations, the partnership earned $160,000. Their-profit-and-loss-sharing agreement states that, first, each partner will receive 20% of their capital balances.
The second level is based on services, with $10,000 to Paddison and $20,000 to Wager. The remainder then will be shared 4:1 between Paddison and Wager, respectively.
Read the requirements.
.....
Requirement 1. Calculate the amount of income each partner will receive under their profit-and-loss-sharing agreement assuming Paddison's capital balance is $91,000 and Wager's capital balance is $91,000. (Complete all answer
boxes. For amounts that are $o, make sure to enter "0" in the appropriate column.)
Paddison
Wager
Total
Net income (Iloss)
Requirements
Capital allocation:
Paddison
1. Calculate the amount of income each partner will receive under their
profit-and-loss-sharing agreement assuming Paddison's capital balance is
$91,000 and Wager's capital balance is $91,000.
Wager
Salary allowance:
2. Journalize the entry to close the Income Summary account for the year.
Paddison
Wager
Total salary and capital allocation
Print
Done
Net income (loss) remaining for allocation
Share of remainder:
Paddison
Wager
Total allocation
Net income (loss) remaining for allocation
Net income (loss) allocated to the partners
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