Partner bonuses, statement of partnership equity The partnership of Angel Investor Associates began operations on January 1, 20Y5, with contributions from two partners as follows: Dennis Overton $102,000 44,880 Ben Testerman The following additional partner transactions took place during the year: 1. In early January, Randy Campbell is admitted to the partnership by contributing $57,120 cash for a 28% interest. 2. Net income of $260,000 was earned in 20Y5. In addition, Dennis Overton received a salary allowance of $60,000 for the year. The three partners agree to an income-sharing ratio equal to their capital balances after admitting Campbell. 3. The partners' withdrawals are equal to half of the increase in their capital balances from salary allowance and income. Prepare a statement of partnership equity for the year ended December 31, 20Y5. If an amount box does not require an entry, leave it blank. Angel Investor Associates Statement of Partnership Equity For the Year Ended December 31, 20Y5 Line Item Description Balances, January 1, 2015 Admission of Randy Campbell Salary allowance Remaining income Partner withdrawals Balances, December 31, 20Y5 Feedback Dennis Overton, Capital 102,000 0 ✓ 60,000 ✓ 122,727.27 X -30,000 X 254,727.27 X $ Ben Testerman, Capital 44,880 0 0 ✓ 34,000 X -17,000 X 61,880 X $ Randy Campbell, Capital 0 ✓ 57,120 ✔ 0 ✓ 43,272.73 X -21,636.36 X 78,756.36 X $ Total 146,880 57,120 60,000 ✔ 200,000 -68,636.36 X 395,363.63 X Check My Work Set up a column for each partner and a total column. Start with beginning capital balances and the admission amount for Campbell. Allocate salary allowances, distribute the remaining income based on the income sharing agreement, subtract withdrawals to obtain the ending partnership capital for each partner and the total column.
Partner bonuses, statement of partnership equity The partnership of Angel Investor Associates began operations on January 1, 20Y5, with contributions from two partners as follows: Dennis Overton $102,000 44,880 Ben Testerman The following additional partner transactions took place during the year: 1. In early January, Randy Campbell is admitted to the partnership by contributing $57,120 cash for a 28% interest. 2. Net income of $260,000 was earned in 20Y5. In addition, Dennis Overton received a salary allowance of $60,000 for the year. The three partners agree to an income-sharing ratio equal to their capital balances after admitting Campbell. 3. The partners' withdrawals are equal to half of the increase in their capital balances from salary allowance and income. Prepare a statement of partnership equity for the year ended December 31, 20Y5. If an amount box does not require an entry, leave it blank. Angel Investor Associates Statement of Partnership Equity For the Year Ended December 31, 20Y5 Line Item Description Balances, January 1, 2015 Admission of Randy Campbell Salary allowance Remaining income Partner withdrawals Balances, December 31, 20Y5 Feedback Dennis Overton, Capital 102,000 0 ✓ 60,000 ✓ 122,727.27 X -30,000 X 254,727.27 X $ Ben Testerman, Capital 44,880 0 0 ✓ 34,000 X -17,000 X 61,880 X $ Randy Campbell, Capital 0 ✓ 57,120 ✔ 0 ✓ 43,272.73 X -21,636.36 X 78,756.36 X $ Total 146,880 57,120 60,000 ✔ 200,000 -68,636.36 X 395,363.63 X Check My Work Set up a column for each partner and a total column. Start with beginning capital balances and the admission amount for Campbell. Allocate salary allowances, distribute the remaining income based on the income sharing agreement, subtract withdrawals to obtain the ending partnership capital for each partner and the total column.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
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:Partner bonuses, statement of partnership equity
The partnership of Angel Investor Associates began operations on January 1, 20Y5, with contributions from two partners as follows:
Dennis Overton
$102,000
44,880
Ben Testerman
The following additional partner transactions took place during the year:
1. In early January, Randy Campbell is admitted to the partnership by contributing $57,120 cash for a 28% interest.
2. Net income of $260,000 was earned in 20Y5. In addition, Dennis Overton received a salary allowance of $60,000 for the year. The three partners agree to an income-sharing ratio equal to their capital balances
after admitting Campbell.
3. The partners' withdrawals are equal to half of the increase in their capital balances from salary allowance and income.
Prepare a statement of partnership equity for the year ended December 31, 20Y5. If an amount box does not require an entry, leave it blank.
Angel Investor Associates
Statement of Partnership Equity
For the Year Ended December 31, 20Y5
Line Item Description
Balances, January 1, 20Y5
Admission of Randy Campbell
Salary allowance
Remaining income
Partner withdrawals
Balances, December 31, 20Y5
Feedback
$
Dennis
Overton,
Capital
102,000 ✓
0
60,000
122,727.27 X
-30,000 X
254,727.27 X $
Ben
Testerman,
Capital
44,880
0
0
34,000 X
-17,000 X
61,880 X $
Randy
Campbell,
Capital
0
57,120
0
43,272.73 X
-21,636.36 X
$
78,756.36 X $
Total
146,880
57,120
60,000
200,000
-68,636.36 X
395,363.63 X
Check My Work
Set up a column for each partner and a total column. Start with beginning capital balances and the admission amount for Campbell. Allocate salary allowances, distribute the remaining income based on the
income sharing agreement, subtract withdrawals to obtain the ending partnership capital for each partner and the total column.
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