Partnership Income Allocation-Various Options The January 1, 2023, balance sheet of the partnership of Linda Kingston and Jeannette Allen is shown below. Assets Liabilities and Capital Cash Other assets 380,000 $20,000 Liabilities $60,000 160,000 Capital - Kingston Capital - Allen 180,000 Total assets $400,000 Total liabilities and capital $400,000 The partnership reported income of $100,000 for 2023. Neither partner withdrew funds from the partnership during the year. Kingston invested $10,000 in the firm on September 30, 2023. Required Compute the December 31, 2023, capital balance for each partner under each of the following assumptions: (c) The partnership agreement specifies that income is divided equally after paying each partner 10 percent interest on her weighted average capital balance. Balance at December 31, 2023 Kingston $ Allen $ 0 x (d) The partnership agreement specifies that Kingston and Allen receive salaries of $45,000 and $40,000, respectively, and that each partner receives 5 percent interest on her capital balance at the beginning of the year. Salary and interest allocations are to be fully implemented. Any remaining income is to be divided equally. Check Balance at December 31, 2023 Kingston $ 0 x Allen $ 0 x
Partnership Income Allocation-Various Options The January 1, 2023, balance sheet of the partnership of Linda Kingston and Jeannette Allen is shown below. Assets Liabilities and Capital Cash Other assets 380,000 $20,000 Liabilities $60,000 160,000 Capital - Kingston Capital - Allen 180,000 Total assets $400,000 Total liabilities and capital $400,000 The partnership reported income of $100,000 for 2023. Neither partner withdrew funds from the partnership during the year. Kingston invested $10,000 in the firm on September 30, 2023. Required Compute the December 31, 2023, capital balance for each partner under each of the following assumptions: (c) The partnership agreement specifies that income is divided equally after paying each partner 10 percent interest on her weighted average capital balance. Balance at December 31, 2023 Kingston $ Allen $ 0 x (d) The partnership agreement specifies that Kingston and Allen receive salaries of $45,000 and $40,000, respectively, and that each partner receives 5 percent interest on her capital balance at the beginning of the year. Salary and interest allocations are to be fully implemented. Any remaining income is to be divided equally. Check Balance at December 31, 2023 Kingston $ 0 x Allen $ 0 x
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Partnership Income Allocation-Various Options
The January 1, 2023, balance sheet of the partnership of Linda Kingston and Jeannette Allen is shown below.
Assets
Liabilities and Capital
$60,000
160,000
Capital -Kingston
Capital - Allen
180,000
Total assets $400,000 Total liabilities and capital $400,000
Cash
Other assets 380,000
The partnership reported income of $100,000 for 2023. Neither partner withdrew funds from the partnership during the year. Kingston invested $10,000 in the firm on September 30, 2023.
$20,000 Liabilities
Required
Compute the December 31, 2023, capital balance for each partner under each of the following assumptions:
(c) The partnership agreement specifies that income is divided equally after paying each partner 10 percent interest on her weighted average capital balance.
Balance at December 31, 2023
Kingston
Allen
$
$
Check
0 x
(d) The partnership agreement specifies that Kingston and Allen receive salaries of $45,000 and $40,000, respectively, and that each partner receives 5 percent interest on her capital balance at the beginning of
the year. Salary and interest allocations are to be fully implemented. Any remaining income is to be divided equally.
Balance at December 31, 2023
Kingston $
0x
Allen
$
0 x
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