PROBLEM 6 – 3: RECONSTRUCTION OF INFORMATIONA and B's partnership agreement stipulates the following:Annual salary of P20,000 to A10% bonus to A, based on profit after salaries and bonusThe balances are shared on 60:40 ratio.Requirement: If B's share in the pai tnership profit for the year is P32,000, how much isthe partnership profit before salary and bonus?AВTotalAmount being allocated7Allocation:1. Salaries20,00020,0002. Bonus43. Allocation of remaining profitAs allocated32,00032,000536

A partnership is a legal entity formed by more than one individual in order to share profits and…

Answered: PROBLEM 6 – 3: RECONSTRUCTION OF…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Exercise 12-7 (Algo) Journalizing partnership transactions LO P2 On March 1, Eckert and Kelley formed a partnership. Eckert contributed $95,000 cash, and Kelley contributed land valued at $76,000 and a building valued at $106,000. The partnership also took Kelley's $85,000 long-term note payable associated with the land and building. The partners agreed to share Income as follows: Eckert gets an annual salary allowance of $28,000, both get an annual Interest allowance of 9% of their initial capital Investment, and any remaining Income or loss is shared equally. On October 20, Eckert withdrew $30,000 cash and Kelley withdrew $23,000 cash. First year Income was $82,000. Required: 18. & 1b. Prepare Journal entries to record the partners' Initial capital Investments and their subsequent cash withdrawals 1c. Determine the partners' shares of Income, and then prepare Journal entries to close Income Summary and the partners' withdrawals accounts. 2. Determine the balances of the partners'…
Problem 14-54 (LO 14-2, 14-3) Wade has a beginning basis in a partnership of $23,000. His share of income and expense from the partnership consists of the following amounts: Ordinary income Guaranteed payment Long-term capital gain 5 1231 gain Charitable contributions $ 179 expense Cash distribution Required: a. What is Wade's self-employment income? $ 43,000 12,000 15,500 4,300 2,000 b. Calculate Wade's basis at the end of the year. 18,000 6,000 a. Self-employment income b. Ending basis Amount
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developed in part a(3). etd 189fc64d53a0a6a71 PROBLEM C.11 Dividing Partnership Profit and LossLOC-10 Rothchild Furnishings, Inc., has three partners-Axle, Brandt, and Conrad. At the beginning of the current year their capital balances were: Axle, $180,000; Brandt, $140,000; and Conrad, $80,000. The partnership agreement provides that partners shall receive salary allowances as follows: Axle, $10,000; Brandt, $50,000; and Conrad, $28,000. The partners shall also be allowed 12 percent interest annually on their capital balances. Residual profit or loss is to be divided: Axle, one-half; Brandt, one-third; and Conrad, one-sixth. Instructions Prepare separate schedules showing how income will be divided among the three partners in each of the following cases. The figure given in each case is the annual partnership net income or loss to be allocated among the partners. Round calculations to the nearest dollar. a. Income of $526,000. b. Income of $95,000. c. Loss of $32,000. PROBLEM C.12 Who…
Dividing partnership income Dahl and Westhoff have decided to form a partnership. They have agreed that Dahl is to invest $400,000 and that Westhoff is to invest $100,000. Dahl is to devote one-third time to the business, and Westhoff is to devote two-thirds time. The following plans for the division of income are being considered: a. Equal division b. In the ratio of original investments c. In the ratio of time devoted to the business d. Interest of 5% on original investments and the remainder equally e. Interest of 5% on original investments, salary allowances of $80,000 to Dahl and $160,000 to Westhoff, and the remainder equally f. Plan (e), except that Westhoff is also to be allowed a bonus of $50,000 if net income exceeds $200,000 Required: For each plan, determine the division of the net income under each of the following assumptions: (1) net income of $300,000 and (2) net income of $750,000. Round answers to the nearest whole dollar. (1) $300,000 (2) $750,000 (2) $750,000…

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