Romero and Mason established a partnership on January 1, 2019. Romero invested cash of $150,000 and Mason invested $75,000 in cash and equipment with a book value of $45,000 and fair value of $50,000. For both partners, the beginning capital balance was to equal the initial investment. Romero and Mason agreed to the following procedure for sharing profits and losses: - 11% interest on the yearly beginning capital balance - $15 per hour of work that can be billed to the partnership's clients - the remainder divided in a 3:2 ratio The Articles of Partnership specified that each partner should withdraw no more than $1,000 per month, which is accounted as direct reduction of that partner’s capital balance. For 2019, the partnership's income was $125,000. Romero had 1,000 billable hours, and Mason worked 1,500 billable hours. Each partner withdrew $1,000 per month throughout 2019. Required: Determine the amount of net income allocated to each partner for 2019
Romero and Mason established a
- 11% interest on the yearly beginning capital balance
- $15 per hour of work that can be billed to the partnership's clients
- the remainder divided in a 3:2 ratio
The Articles of Partnership specified that each partner should withdraw no more than $1,000 per month, which is accounted as direct reduction of that partner’s capital balance.
For 2019, the partnership's income was $125,000. Romero had 1,000 billable hours, and Mason worked 1,500 billable hours. Each partner withdrew $1,000 per month throughout 2019.
Required:
- Determine the amount of net income allocated to each partner for 2019.
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