The partnership agreement of Angela and Dawn has the following provisions: The partners are to earn 10 percent on the average capital. Angela and Dawn are to earn salaries of $26,000 and $18,000, respectively. Any remaining income or loss is to be divided between Angela and Dawn using a 70:30 ratio. Angela’s average capital is $66,000 and Dawn’s is $52,000. Required: Prepare an income distribution schedule assuming the income of the partnership is (a) $90,000 and (b) $33,000. If no partnership agreement exists, what does the UPA 1997 prescribe as the profit or loss distribution percentages? Note: Amounts that are to be deducted from an individual partner's capital balance should be entered with a minus sign.
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.
The
- The partners are to earn 10 percent on the average capital.
- Angela and Dawn are to earn salaries of $26,000 and $18,000, respectively.
- Any remaining income or loss is to be divided between Angela and Dawn using a 70:30 ratio.
Angela’s average capital is $66,000 and Dawn’s is $52,000.
Required:
Prepare an income distribution schedule assuming the income of the partnership is (a) $90,000 and (b) $33,000. If no partnership agreement exists, what does the UPA 1997 prescribe as the profit or loss distribution percentages?
Note: Amounts that are to be deducted from an individual partner's capital balance should be entered with a minus sign.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
