Required information Use the following information for the Exercises below. (Algo) [The following information applies to the questions displayed below.] Ramer and Knox began a partnership by investing $86,000 and $129,000, respectively. During its first year, the partnership earned $250,000. Prepare calculations showing how the $250,000 income is allocated under each separate plan for sharing income and loss.
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.
![Required information
Use the following information for the Exercises below. (Algo)
[The following information applies to the questions displayed below.]
Ramer and Knox began a partnership by investing $86,000 and $129,000, respectively. During its first year, the
partnership earned $250,000. Prepare calculations showing how the $250,000 income is allocated under each separate
plan for sharing income and loss.
Exercise 12-5 (Algo) Part 1 Income allocation in a partnership LO P2
1. The partners did not agree on a plan, and therefore share income equally.
Ramer
Knox](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fea6bde4e-c725-4e00-a32f-5e39c02069ee%2F3fc11305-a687-4879-9f30-ca99f63d53e8%2Fc05bt8r_processed.jpeg&w=3840&q=75)
![Required information
Use the following information for the Exercises below. (Algo)
[The following information applies to the questions displayed below.]
Ramer and Knox began a partnership by investing $86,000 and $129,000, respectively. During its first year, the
partnership earned $250,000. Prepare calculations showing how the $250,000 income is allocated under each separate
plan for sharing income and loss.
Exercise 12-5 (Algo) Part 2 Income allocation in a partnership LO P2
2. The partners agreed to share income and loss in proportion to their initial investments. Net income is $250,000.
Note: Do not round intermediate calculations.
Fraction to Allocate
Ramer
Ramer's Share Fraction to Allocate Knox's Share of Total Income
of Income
Knox
Income
Allocated
Show Transcribed Text
Net Income
Salary allowances
Interest allowances
Total salary and interest
Balance of income
Balance allocated equally
Balance of income
Shares of the partners
Exercise 12-5 (Algo) Part 3 Income allocation in a partnership LO P2
3. The partners agreed to share income by giving a $68,000 per year salary allowance to Ramer, a $42,000 per year salary allowance
to Knox, 10% interest on their initial capital investments, and the remaining balance shared equally. Net income is $250,000.
Note: Enter all allowances as positive values. Enter losses as negative values.
Ramer
Knox
Ĉ
Total](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fea6bde4e-c725-4e00-a32f-5e39c02069ee%2F3fc11305-a687-4879-9f30-ca99f63d53e8%2Fkvqke6l_processed.jpeg&w=3840&q=75)
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