Q 12 -Waleed, Haider, and Lateef began a small manufacturing company organized as a partnership. Waleed, Haider, and Lateef have capital balances on January 1 of $80,000, $60,000 and $40,000, respectively. The partnership income-sharing agreement is as follows: (1). Salaries to Waleed and Haider of $30,000 each and a salary to Lateef of $25,000. (2). Interest at 5% on beginning capital balances. (3). Remaining profits are to be allocated equally among the partners. Instructions (a). Prepare a schedule showing the distribution of net income, assuming net income is (1) $100,000 and (2) $85,000. (b). Journalize the allocation of net income in each of the situations above.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Q 12 -Waleed, Haider, and Lateef began a small manufacturing company organized as a
partnership. Waleed, Haider, and Lateef have capital balances on January 1 of $80,000,
$60,000 and $40,000, respectively. The partnership income-sharing agreement is as
follows:
(1). Salaries to Waleed and Haider of $30,000 each and a salary to Lateef of $25,000.
(2). Interest at 5% on beginning capital balances.
(3). Remaining profits are to be allocated equally among the partners.
Instructions
(a). Prepare a schedule showing the distribution of net income, assuming net income is
(1) $100,000 and (2) $85,000.
(b). Journalize the allocation of net income in each of the situations above.
Transcribed Image Text:Q 12 -Waleed, Haider, and Lateef began a small manufacturing company organized as a partnership. Waleed, Haider, and Lateef have capital balances on January 1 of $80,000, $60,000 and $40,000, respectively. The partnership income-sharing agreement is as follows: (1). Salaries to Waleed and Haider of $30,000 each and a salary to Lateef of $25,000. (2). Interest at 5% on beginning capital balances. (3). Remaining profits are to be allocated equally among the partners. Instructions (a). Prepare a schedule showing the distribution of net income, assuming net income is (1) $100,000 and (2) $85,000. (b). Journalize the allocation of net income in each of the situations above.
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