Reardon and Reese had capital balances of $140,000 and $160,000, respectively, at the beginning of the current fiscal year. The partnership agreement provides for salary allowances of $25,000 and $35,000, respectively; an allowance of interest at 12% on the capital balances at the beginning of the year; and the remaining net income divided equally. Net income for the current year was $120,000. a. Present the Division of net income statement for the current year. Net income $120,000 Reardon Reese Total Division of net income: Salary allowance $fill in the blank 1 $fill in the blank 2 $fill in the blank 3 Interest allowance fill in the blank 4 fill in the blank 5 fill in the blank 6 fill in the blank 8 fill in the blank 9 fill in the blank 10 Net income $fill in the blank 11 $fill in the blank 12 $fill in the blank 13 b. Assuming that the net income had been $76,000 instead of $120,000, present the Division of net income section of the income statement for the current year. Net income $76,000 Reardon Reese Total Division of net income: Salary allowance $fill in the blank 14 $fill in the blank 15 $fill in the blank 16 Interest allowance fill in the blank 17 fill in the blank 18 fill in the blank 19 Total $fill in the blank 20 $fill in the blank 21 $fill in the blank 22 fill in the blank 24 fill in the blank 25 fill in the blank 26 Net income
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
Reardon and Reese had capital balances of $140,000 and $160,000, respectively, at the beginning of the current fiscal year. The partnership agreement provides for salary allowances of $25,000 and $35,000, respectively; an allowance of interest at 12% on the capital balances at the beginning of the year; and the remaining net income divided equally. Net income for the current year was $120,000.
a. Present the Division of net income statement for the current year.
| Net income | $120,000 | ||||||
| Reardon | Reese | Total | |||||
| Division of net income: | |||||||
| Salary allowance | $fill in the blank 1 | $fill in the blank 2 | $fill in the blank 3 | ||||
| Interest allowance | fill in the blank 4 | fill in the blank 5 | fill in the blank 6 | ||||
| fill in the blank 8 | fill in the blank 9 | fill in the blank 10 | |||||
| Net income | $fill in the blank 11 | $fill in the blank 12 | $fill in the blank 13 |
b. Assuming that the net income had been $76,000 instead of $120,000, present the Division of net income section of the income statement for the current year.
| Net income | $76,000 | ||||||
| Reardon | Reese | Total | |||||
| Division of net income: | |||||||
| Salary allowance | $fill in the blank 14 | $fill in the blank 15 | $fill in the blank 16 | ||||
| Interest allowance | fill in the blank 17 | fill in the blank 18 | fill in the blank 19 | ||||
| Total | $fill in the blank 20 | $fill in the blank 21 | $fill in the blank 22 | ||||
| fill in the blank 24 | fill in the blank 25 | fill in the blank 26 | |||||
| Net income |
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