Sharon Guenther and Robert Firmin, both of whom are CPAS, form a partnership, with Guenther investing $100,000 and Firmin, $80,000. They agree to share net income as follows: 1. Salary allowances of $80,000 to Guenther and $60,000 to Firmin. 2. Interest allowances at 15 percent of beginning capital account balances. 3. Any partnership earnings in excess of the amount required to cover the interest and salary allowances to be divided 60 percent to Guenther and 40 percent to Firmin. The partnership net income for the first year of operations amounted to $247,000 before interest and salary allowances. Show how this $247,000 will be divided between the two partners. List on separate lines the amounts of interest, salaries, and the residual amount divided. Guenther Firmin Net Income Net income to be divided Salary allowances to partners Income after salary allowances 24 Interest allowances on beginning capital: Guenther Firmin Total allocated as interest 2$ Remaining income after salaries and interest Allocated in a fixed ratio:

Sharon Guenther and Robert Firmin, both of whom are CPAS, form a partnership, with Guenther investing $100,000 and Firmin, $80,000. They agree to share net income as follows: 1. Salary allowances of $80,000 to Guenther and $60,000 to Firmin. 2. Interest allowances at 15 percent of beginning capital account balances. 3. Any partnership earnings in excess of the amount required to cover the interest and salary allowances to be divided 60 percent to Guenther and 40 percent to Firmin. The partnership net income for the first year of operations amounted to $247,000 before interest and salary allowances. Show how this $247,000 will be divided between the two partners. List on separate lines the amounts of interest, salaries, and the residual amount divided. Guenther Firmin Net Income Net income to be divided Salary allowances to partners Income after salary allowances 24 Interest allowances on beginning capital: Guenther Firmin Total allocated as interest 2$ Remaining income after salaries and interest Allocated in a fixed ratio:

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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