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.

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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