Year One Ending Capital Balance Allegan Beginning Capital Net Loss Drawings Berrien Kent Year Two Ending Capital Balance Allegan Beginning Capital Net Loss Drawings Berrien Kent
Year One Ending Capital Balance Allegan Beginning Capital Net Loss Drawings Berrien Kent Year Two Ending Capital Balance Allegan Beginning Capital Net Loss Drawings Berrien Kent
Chapter3: Income Sources
Section: Chapter Questions
Problem 9DQ
Related questions
Question
A partnership begins its first year of operations with the following capital balances:
| Allegan, Capital | $ 96,000 |
|---|---|
| Berrien, Capital | 86,000 |
| Kent, Capital | 96,000 |
According to the articles of partnership, all profits will be assigned as follows:
- Allegan will be awarded an annual salary of $20,000 with $10,000 assigned to Kent.
- The partners will be attributed interest equal to 10 percent of the capital balance as of the first day of the year.
- The remainder will be assigned on a 5:2:3 basis, respectively.
- Each partner is allowed to withdraw up to $7,000 per year.
The net loss for the first year of operations is $36,000, and net income for the subsequent year is $30,000. Each partner withdraws the maximum amount from the business each period.
Transcribed Image Text:Year One Ending Capital Balance
Allegan
Beginning Capital
Net Loss
Drawings
Berrien
Kent
Year Two Ending Capital Balance
Allegan
Beginning Capital
Net Loss
Drawings
Berrien Kent
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