Question 1: On January 26, 2022, Ms. Kramer and Mr. Smith entered into a partnership together. Kramer contributed $90,000 cash and land valued at $60,000 while Smith contributed land valued at $50,000 and a building valued at $65,000. They agree to share profits as follows: • • • Kramer is to receive an annual "salary" of $50,000 if the partnership had a profit of 100K or more. If not, Kramer is to receive an annual "salary" of $25,000. Smith is to receive an annual "salary" of $10,000 regardless if the partnership is an income or loss position. Each partner is to receive a 50% "interest" on his original capital investment, and any remaining profit or loss is to be shared equally. On October 17,2022, Kramer withdrew $50,000 and Smith Withdrew $18,000. On November 10, 2022 Kramer deposited $25,000 into the partnership. The company had net income of $250,000 at the end of 2022. The depreciation expense was $10,000 each year for 2022. There was a tax expense of $54,000. The company closes its books on December 31. Required: Determine the amount of income each partner received in 2022 and their final owner's capital as at January 1, 2023.
Question 1: On January 26, 2022, Ms. Kramer and Mr. Smith entered into a partnership together. Kramer contributed $90,000 cash and land valued at $60,000 while Smith contributed land valued at $50,000 and a building valued at $65,000. They agree to share profits as follows: • • • Kramer is to receive an annual "salary" of $50,000 if the partnership had a profit of 100K or more. If not, Kramer is to receive an annual "salary" of $25,000. Smith is to receive an annual "salary" of $10,000 regardless if the partnership is an income or loss position. Each partner is to receive a 50% "interest" on his original capital investment, and any remaining profit or loss is to be shared equally. On October 17,2022, Kramer withdrew $50,000 and Smith Withdrew $18,000. On November 10, 2022 Kramer deposited $25,000 into the partnership. The company had net income of $250,000 at the end of 2022. The depreciation expense was $10,000 each year for 2022. There was a tax expense of $54,000. The company closes its books on December 31. Required: Determine the amount of income each partner received in 2022 and their final owner's capital as at January 1, 2023.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Question 1:
On January 26, 2022, Ms. Kramer and Mr. Smith entered into a partnership together. Kramer
contributed $90,000 cash and land valued at $60,000 while Smith contributed land valued at $50,000
and a building valued at $65,000. They agree to share profits as follows:
●
Kramer is to receive an annual "salary" of $50,000 if the partnership had a profit of 100K or
more. If not, Kramer is to receive an annual "salary" of $25,000. Smith is to receive an annual
"salary" of $10,000 regardless if the partnership is an income or loss position.
Each partner is to receive a 50% "interest" on his original capital investment, and any remaining
profit or loss is to be shared equally.
On October 17,2022, Kramer withdrew $50,000 and Smith Withdrew $18,000.
On November 10, 2022 Kramer deposited $25,000 into the partnership.
The company had net income of $250,000 at the end of 2022.
The depreciation expense was $10,000 each year for 2022.
There was a tax expense of $54,000.
The company closes its books on December 31.
Required:
Determine the amount of income each partner received in 2022 and their final owner's capital as at
January 1, 2023.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcb78f270-b29f-4df2-98c8-b80bb2ba3130%2Fd329f993-8e75-4692-9b81-b81f59e3c6bd%2Fcxfp5gx_processed.png&w=3840&q=75)
Transcribed Image Text:Question 1:
On January 26, 2022, Ms. Kramer and Mr. Smith entered into a partnership together. Kramer
contributed $90,000 cash and land valued at $60,000 while Smith contributed land valued at $50,000
and a building valued at $65,000. They agree to share profits as follows:
●
Kramer is to receive an annual "salary" of $50,000 if the partnership had a profit of 100K or
more. If not, Kramer is to receive an annual "salary" of $25,000. Smith is to receive an annual
"salary" of $10,000 regardless if the partnership is an income or loss position.
Each partner is to receive a 50% "interest" on his original capital investment, and any remaining
profit or loss is to be shared equally.
On October 17,2022, Kramer withdrew $50,000 and Smith Withdrew $18,000.
On November 10, 2022 Kramer deposited $25,000 into the partnership.
The company had net income of $250,000 at the end of 2022.
The depreciation expense was $10,000 each year for 2022.
There was a tax expense of $54,000.
The company closes its books on December 31.
Required:
Determine the amount of income each partner received in 2022 and their final owner's capital as at
January 1, 2023.
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