Tables showing allocation of partnership income under each of the three plans

Question

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Answer 1

Question

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement 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, and drawings of a partner.

Chapter 12, Problem 3BPSB

Requirement-1:

To determine

To prepare: Tables showing allocation of partnership income under each of the three plans

Requirement-1:

Expert Solution

Answer to Problem 3BPSB

Solution: Tables showing allocation of partnership income under each of the three plans are as follows:

Income (Loss) Sharing Plan	Cook	Xi	Schwartz	Total
Plan-(a)	$ 80,000	$ 80,000	$ 80,000	$ 240,000
Plan-(b)	$ 72,000	$ 108,000	$ 60,000	$ 240,000
Plan-(c)	$ 68,080	$ 66,720	$ 105,200	$ 240,000

Explanation of Solution

Explanation: Tables showing allocation of partnership income under each of the three plans are explained as follows:

Plan-(a):	Cook	Xi	Schwartz	Total
Net Income/ (loss) for the year (A)				$ 240,000
Allocated Net Income/ (loss) = A/3 =	$ 80,000	$ 80,000	$ 80,000	$ 240,000

Plan-(b):	Cook	Xi	Schwartz	Total
Beginning Capital investment (A)	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Ratio (B) = (A/Total)	0.30	0.45	0.25
Net Income/ (loss) for the year (C)				$ 240,000
*Allocated Net Income/ (loss) = CB =**	$ 72,000	$ 108,000	$ 60,000	$ 240,000

Plan-(c):	Cook	Xi	Schwartz	Total
Beginning Capital investment (A)	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Interest on beginning Capital Investment (B) = A*12%	$ 17,280	$ 25,920	$ 14,400	$ 57,600
Salary Allowance (C)	$ 40,000	$ 30,000	$ 80,000	$ 150,000
Total Interest and Salary (D) = B+C =	$ 57,280	$ 55,920	$ 94,400	$ 207,600
Net Income/ (loss) for the year (E)				$ 240,000
Balance Net Income (F) = (E-F) (Divided Equally)	$ 10,800	$ 10,800	$ 10,800	$ 32,400
Allocated Net Income = (D+F)	$ 68,080	$ 66,720	$ 105,200	$ 240,000

Requirement-2:

To determine

To prepare: Statement of Partner’s Equity using the plan c

Requirement-2:

Expert Solution

Answer to Problem 3BPSB

Solution: Statement of Partner’s Equity using the plan c is as follows:

Statement of Partner's Equity
	Cook	Xi	Schwartz	Total
Beginning Capital investment	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Add: Allocated Net Income	$ 17,280	$ 15,920	$ 54,400	$ 87,600
Less: Withdrawals	$ (18,000)	$ (38,000)	$ (24,000)	$ (80,000)
Ending Capital balance	$ 143,280	$ 193,920	$ 150,400	$ 487,600

Explanation of Solution

Explanation: Statement of Partner’s Equity using the plan c is prepared as follows:

Plan-(c):	Cook	Xi	Schwartz	Total
Beginning Capital investment (A)	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Interest on beginning Capital Investment (B) = A*12%	$ 17,280	$ 25,920	$ 14,400	$ 57,600
Salary Allowance (C)	$ 40,000	$ 30,000	$ 80,000	$ 150,000
Total Interest and Salary (D) = B+C =	$ 57,280	$ 55,920	$ 94,400	$ 207,600
Net Income/ (loss) for the year (E)				$ 87,600
Balance Net Income (F) = (E-F) (Divided Equally)	$ (40,000)	$ (40,000)	$ (40,000)	$(120,000)
Allocated Net Income = (D+F)	$ 17,280	$ 15,920	$ 54,400	$ 87,600

Statement of Partner's Equity
	Cook	Xi	Schwartz	Total
Beginning Capital investment	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Add: Allocated Net Income	$ 17,280	$ 15,920	$ 54,400	$ 87,600
Less: Withdrawals	$ (18,000)	$ (38,000)	$ (24,000)	$ (80,000)
Ending Capital balance	$ 143,280	$ 193,920	$ 150,400	$ 487,600

Requirement-3:

To determine

To prepare: Closing entries to allocate the net income to partners and closing the withdrawal accounts

Requirement-3:

Expert Solution

Answer to Problem 3BPSB

Solution: Closing entries to allocate the net income to partners and closing the withdrawal accounts are as follows:

Closing entries as on Dec. 31
Account titles	Debit	Credit
Income Summary	$ 87,600
Cook's Capital		$ 17,280
Xi's Capital		$ 15,920
Schwartz's Capital		$ 54,400
(Being net income allocated to partners)

Cook's Capital	$ 18,000
Xi's Capital	$ 38,000
Schwartz's Capital	$ 24,000
Cook's Withdrawal		$ 18,000
Xi's Withdrawal		$ 38,000
Schwartz's Withdrawal		$ 24,000
(Being partner's withdrawal accounts closed)

Explanation of Solution

Explanation: Allocation of net income to partners is explained as follows:

Plan-(c):	Cook	Xi	Schwartz	Total
Beginning Capital investment (A)	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Interest on beginning Capital Investment (B) = A*12%	$ 17,280	$ 25,920	$ 14,400	$ 57,600
Salary Allowance (C)	$ 40,000	$ 30,000	$ 80,000	$ 150,000
Total Interest and Salary (D) = B+C =	$ 57,280	$ 55,920	$ 94,400	$ 207,600
Net Income/ (loss) for the year (E)				$ 87,600
Balance Net Income (F) = (E-F) (Divided Equally)	$ (40,000)	$ (40,000)	$ (40,000)	$(120,000)
Allocated Net Income = (D+F)	$ 17,280	$ 15,920	$ 54,400	$ 87,600

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Answer 2

Question

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement 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, and drawings of a partner.

Chapter 12, Problem 3BPSB

Requirement-1:

To determine

To prepare: Tables showing allocation of partnership income under each of the three plans

Requirement-1:

Expert Solution

Answer to Problem 3BPSB

Solution: Tables showing allocation of partnership income under each of the three plans are as follows:

Income (Loss) Sharing Plan	Cook	Xi	Schwartz	Total
Plan-(a)	$ 80,000	$ 80,000	$ 80,000	$ 240,000
Plan-(b)	$ 72,000	$ 108,000	$ 60,000	$ 240,000
Plan-(c)	$ 68,080	$ 66,720	$ 105,200	$ 240,000

Explanation of Solution

Explanation: Tables showing allocation of partnership income under each of the three plans are explained as follows:

Plan-(a):	Cook	Xi	Schwartz	Total
Net Income/ (loss) for the year (A)				$ 240,000
Allocated Net Income/ (loss) = A/3 =	$ 80,000	$ 80,000	$ 80,000	$ 240,000

Plan-(b):	Cook	Xi	Schwartz	Total
Beginning Capital investment (A)	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Ratio (B) = (A/Total)	0.30	0.45	0.25
Net Income/ (loss) for the year (C)				$ 240,000
*Allocated Net Income/ (loss) = CB =**	$ 72,000	$ 108,000	$ 60,000	$ 240,000

Plan-(c):	Cook	Xi	Schwartz	Total
Beginning Capital investment (A)	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Interest on beginning Capital Investment (B) = A*12%	$ 17,280	$ 25,920	$ 14,400	$ 57,600
Salary Allowance (C)	$ 40,000	$ 30,000	$ 80,000	$ 150,000
Total Interest and Salary (D) = B+C =	$ 57,280	$ 55,920	$ 94,400	$ 207,600
Net Income/ (loss) for the year (E)				$ 240,000
Balance Net Income (F) = (E-F) (Divided Equally)	$ 10,800	$ 10,800	$ 10,800	$ 32,400
Allocated Net Income = (D+F)	$ 68,080	$ 66,720	$ 105,200	$ 240,000

Requirement-2:

To determine

To prepare: Statement of Partner’s Equity using the plan c

Requirement-2:

Expert Solution

Answer to Problem 3BPSB

Solution: Statement of Partner’s Equity using the plan c is as follows:

Statement of Partner's Equity
	Cook	Xi	Schwartz	Total
Beginning Capital investment	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Add: Allocated Net Income	$ 17,280	$ 15,920	$ 54,400	$ 87,600
Less: Withdrawals	$ (18,000)	$ (38,000)	$ (24,000)	$ (80,000)
Ending Capital balance	$ 143,280	$ 193,920	$ 150,400	$ 487,600

Explanation of Solution

Explanation: Statement of Partner’s Equity using the plan c is prepared as follows:

Plan-(c):	Cook	Xi	Schwartz	Total
Beginning Capital investment (A)	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Interest on beginning Capital Investment (B) = A*12%	$ 17,280	$ 25,920	$ 14,400	$ 57,600
Salary Allowance (C)	$ 40,000	$ 30,000	$ 80,000	$ 150,000
Total Interest and Salary (D) = B+C =	$ 57,280	$ 55,920	$ 94,400	$ 207,600
Net Income/ (loss) for the year (E)				$ 87,600
Balance Net Income (F) = (E-F) (Divided Equally)	$ (40,000)	$ (40,000)	$ (40,000)	$(120,000)
Allocated Net Income = (D+F)	$ 17,280	$ 15,920	$ 54,400	$ 87,600

Statement of Partner's Equity
	Cook	Xi	Schwartz	Total
Beginning Capital investment	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Add: Allocated Net Income	$ 17,280	$ 15,920	$ 54,400	$ 87,600
Less: Withdrawals	$ (18,000)	$ (38,000)	$ (24,000)	$ (80,000)
Ending Capital balance	$ 143,280	$ 193,920	$ 150,400	$ 487,600

Requirement-3:

To determine

To prepare: Closing entries to allocate the net income to partners and closing the withdrawal accounts

Requirement-3:

Expert Solution

Answer to Problem 3BPSB

Solution: Closing entries to allocate the net income to partners and closing the withdrawal accounts are as follows:

Closing entries as on Dec. 31
Account titles	Debit	Credit
Income Summary	$ 87,600
Cook's Capital		$ 17,280
Xi's Capital		$ 15,920
Schwartz's Capital		$ 54,400
(Being net income allocated to partners)

Cook's Capital	$ 18,000
Xi's Capital	$ 38,000
Schwartz's Capital	$ 24,000
Cook's Withdrawal		$ 18,000
Xi's Withdrawal		$ 38,000
Schwartz's Withdrawal		$ 24,000
(Being partner's withdrawal accounts closed)

Explanation of Solution

Explanation: Allocation of net income to partners is explained as follows:

Plan-(c):	Cook	Xi	Schwartz	Total
Beginning Capital investment (A)	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Interest on beginning Capital Investment (B) = A*12%	$ 17,280	$ 25,920	$ 14,400	$ 57,600
Salary Allowance (C)	$ 40,000	$ 30,000	$ 80,000	$ 150,000
Total Interest and Salary (D) = B+C =	$ 57,280	$ 55,920	$ 94,400	$ 207,600
Net Income/ (loss) for the year (E)				$ 87,600
Balance Net Income (F) = (E-F) (Divided Equally)	$ (40,000)	$ (40,000)	$ (40,000)	$(120,000)
Allocated Net Income = (D+F)	$ 17,280	$ 15,920	$ 54,400	$ 87,600

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Answer 3

Question

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement 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, and drawings of a partner.

Chapter 12, Problem 3BPSB

Requirement-1:

To determine

To prepare: Tables showing allocation of partnership income under each of the three plans

Requirement-1:

Expert Solution

Answer to Problem 3BPSB

Solution: Tables showing allocation of partnership income under each of the three plans are as follows:

Income (Loss) Sharing Plan	Cook	Xi	Schwartz	Total
Plan-(a)	$ 80,000	$ 80,000	$ 80,000	$ 240,000
Plan-(b)	$ 72,000	$ 108,000	$ 60,000	$ 240,000
Plan-(c)	$ 68,080	$ 66,720	$ 105,200	$ 240,000

Explanation of Solution

Explanation: Tables showing allocation of partnership income under each of the three plans are explained as follows:

Plan-(a):	Cook	Xi	Schwartz	Total
Net Income/ (loss) for the year (A)				$ 240,000
Allocated Net Income/ (loss) = A/3 =	$ 80,000	$ 80,000	$ 80,000	$ 240,000

Plan-(b):	Cook	Xi	Schwartz	Total
Beginning Capital investment (A)	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Ratio (B) = (A/Total)	0.30	0.45	0.25
Net Income/ (loss) for the year (C)				$ 240,000
*Allocated Net Income/ (loss) = CB =**	$ 72,000	$ 108,000	$ 60,000	$ 240,000

Plan-(c):	Cook	Xi	Schwartz	Total
Beginning Capital investment (A)	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Interest on beginning Capital Investment (B) = A*12%	$ 17,280	$ 25,920	$ 14,400	$ 57,600
Salary Allowance (C)	$ 40,000	$ 30,000	$ 80,000	$ 150,000
Total Interest and Salary (D) = B+C =	$ 57,280	$ 55,920	$ 94,400	$ 207,600
Net Income/ (loss) for the year (E)				$ 240,000
Balance Net Income (F) = (E-F) (Divided Equally)	$ 10,800	$ 10,800	$ 10,800	$ 32,400
Allocated Net Income = (D+F)	$ 68,080	$ 66,720	$ 105,200	$ 240,000

Requirement-2:

To determine

To prepare: Statement of Partner’s Equity using the plan c

Requirement-2:

Expert Solution

Answer to Problem 3BPSB

Solution: Statement of Partner’s Equity using the plan c is as follows:

Statement of Partner's Equity
	Cook	Xi	Schwartz	Total
Beginning Capital investment	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Add: Allocated Net Income	$ 17,280	$ 15,920	$ 54,400	$ 87,600
Less: Withdrawals	$ (18,000)	$ (38,000)	$ (24,000)	$ (80,000)
Ending Capital balance	$ 143,280	$ 193,920	$ 150,400	$ 487,600

Explanation of Solution

Explanation: Statement of Partner’s Equity using the plan c is prepared as follows:

Plan-(c):	Cook	Xi	Schwartz	Total
Beginning Capital investment (A)	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Interest on beginning Capital Investment (B) = A*12%	$ 17,280	$ 25,920	$ 14,400	$ 57,600
Salary Allowance (C)	$ 40,000	$ 30,000	$ 80,000	$ 150,000
Total Interest and Salary (D) = B+C =	$ 57,280	$ 55,920	$ 94,400	$ 207,600
Net Income/ (loss) for the year (E)				$ 87,600
Balance Net Income (F) = (E-F) (Divided Equally)	$ (40,000)	$ (40,000)	$ (40,000)	$(120,000)
Allocated Net Income = (D+F)	$ 17,280	$ 15,920	$ 54,400	$ 87,600

Statement of Partner's Equity
	Cook	Xi	Schwartz	Total
Beginning Capital investment	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Add: Allocated Net Income	$ 17,280	$ 15,920	$ 54,400	$ 87,600
Less: Withdrawals	$ (18,000)	$ (38,000)	$ (24,000)	$ (80,000)
Ending Capital balance	$ 143,280	$ 193,920	$ 150,400	$ 487,600

Requirement-3:

To determine

To prepare: Closing entries to allocate the net income to partners and closing the withdrawal accounts

Requirement-3:

Expert Solution

Answer to Problem 3BPSB

Solution: Closing entries to allocate the net income to partners and closing the withdrawal accounts are as follows:

Closing entries as on Dec. 31
Account titles	Debit	Credit
Income Summary	$ 87,600
Cook's Capital		$ 17,280
Xi's Capital		$ 15,920
Schwartz's Capital		$ 54,400
(Being net income allocated to partners)

Cook's Capital	$ 18,000
Xi's Capital	$ 38,000
Schwartz's Capital	$ 24,000
Cook's Withdrawal		$ 18,000
Xi's Withdrawal		$ 38,000
Schwartz's Withdrawal		$ 24,000
(Being partner's withdrawal accounts closed)

Explanation of Solution

Explanation: Allocation of net income to partners is explained as follows:

Plan-(c):	Cook	Xi	Schwartz	Total
Beginning Capital investment (A)	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Interest on beginning Capital Investment (B) = A*12%	$ 17,280	$ 25,920	$ 14,400	$ 57,600
Salary Allowance (C)	$ 40,000	$ 30,000	$ 80,000	$ 150,000
Total Interest and Salary (D) = B+C =	$ 57,280	$ 55,920	$ 94,400	$ 207,600
Net Income/ (loss) for the year (E)				$ 87,600
Balance Net Income (F) = (E-F) (Divided Equally)	$ (40,000)	$ (40,000)	$ (40,000)	$(120,000)
Allocated Net Income = (D+F)	$ 17,280	$ 15,920	$ 54,400	$ 87,600

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Answer 4

Question

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement 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, and drawings of a partner.

Chapter 12, Problem 3BPSB

Requirement-1:

To determine

To prepare: Tables showing allocation of partnership income under each of the three plans

Requirement-1:

Expert Solution

Answer to Problem 3BPSB

Solution: Tables showing allocation of partnership income under each of the three plans are as follows:

Income (Loss) Sharing Plan	Cook	Xi	Schwartz	Total
Plan-(a)	$ 80,000	$ 80,000	$ 80,000	$ 240,000
Plan-(b)	$ 72,000	$ 108,000	$ 60,000	$ 240,000
Plan-(c)	$ 68,080	$ 66,720	$ 105,200	$ 240,000

Explanation of Solution

Explanation: Tables showing allocation of partnership income under each of the three plans are explained as follows:

Plan-(a):	Cook	Xi	Schwartz	Total
Net Income/ (loss) for the year (A)				$ 240,000
Allocated Net Income/ (loss) = A/3 =	$ 80,000	$ 80,000	$ 80,000	$ 240,000

Plan-(b):	Cook	Xi	Schwartz	Total
Beginning Capital investment (A)	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Ratio (B) = (A/Total)	0.30	0.45	0.25
Net Income/ (loss) for the year (C)				$ 240,000
*Allocated Net Income/ (loss) = CB =**	$ 72,000	$ 108,000	$ 60,000	$ 240,000

Plan-(c):	Cook	Xi	Schwartz	Total
Beginning Capital investment (A)	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Interest on beginning Capital Investment (B) = A*12%	$ 17,280	$ 25,920	$ 14,400	$ 57,600
Salary Allowance (C)	$ 40,000	$ 30,000	$ 80,000	$ 150,000
Total Interest and Salary (D) = B+C =	$ 57,280	$ 55,920	$ 94,400	$ 207,600
Net Income/ (loss) for the year (E)				$ 240,000
Balance Net Income (F) = (E-F) (Divided Equally)	$ 10,800	$ 10,800	$ 10,800	$ 32,400
Allocated Net Income = (D+F)	$ 68,080	$ 66,720	$ 105,200	$ 240,000

Requirement-2:

To determine

To prepare: Statement of Partner’s Equity using the plan c

Requirement-2:

Expert Solution

Answer to Problem 3BPSB

Solution: Statement of Partner’s Equity using the plan c is as follows:

Statement of Partner's Equity
	Cook	Xi	Schwartz	Total
Beginning Capital investment	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Add: Allocated Net Income	$ 17,280	$ 15,920	$ 54,400	$ 87,600
Less: Withdrawals	$ (18,000)	$ (38,000)	$ (24,000)	$ (80,000)
Ending Capital balance	$ 143,280	$ 193,920	$ 150,400	$ 487,600

Explanation of Solution

Explanation: Statement of Partner’s Equity using the plan c is prepared as follows:

Plan-(c):	Cook	Xi	Schwartz	Total
Beginning Capital investment (A)	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Interest on beginning Capital Investment (B) = A*12%	$ 17,280	$ 25,920	$ 14,400	$ 57,600
Salary Allowance (C)	$ 40,000	$ 30,000	$ 80,000	$ 150,000
Total Interest and Salary (D) = B+C =	$ 57,280	$ 55,920	$ 94,400	$ 207,600
Net Income/ (loss) for the year (E)				$ 87,600
Balance Net Income (F) = (E-F) (Divided Equally)	$ (40,000)	$ (40,000)	$ (40,000)	$(120,000)
Allocated Net Income = (D+F)	$ 17,280	$ 15,920	$ 54,400	$ 87,600

Statement of Partner's Equity
	Cook	Xi	Schwartz	Total
Beginning Capital investment	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Add: Allocated Net Income	$ 17,280	$ 15,920	$ 54,400	$ 87,600
Less: Withdrawals	$ (18,000)	$ (38,000)	$ (24,000)	$ (80,000)
Ending Capital balance	$ 143,280	$ 193,920	$ 150,400	$ 487,600

Requirement-3:

To determine

To prepare: Closing entries to allocate the net income to partners and closing the withdrawal accounts

Requirement-3:

Expert Solution

Answer to Problem 3BPSB

Solution: Closing entries to allocate the net income to partners and closing the withdrawal accounts are as follows:

Closing entries as on Dec. 31
Account titles	Debit	Credit
Income Summary	$ 87,600
Cook's Capital		$ 17,280
Xi's Capital		$ 15,920
Schwartz's Capital		$ 54,400
(Being net income allocated to partners)

Cook's Capital	$ 18,000
Xi's Capital	$ 38,000
Schwartz's Capital	$ 24,000
Cook's Withdrawal		$ 18,000
Xi's Withdrawal		$ 38,000
Schwartz's Withdrawal		$ 24,000
(Being partner's withdrawal accounts closed)

Explanation of Solution

Explanation: Allocation of net income to partners is explained as follows:

Plan-(c):	Cook	Xi	Schwartz	Total
Beginning Capital investment (A)	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Interest on beginning Capital Investment (B) = A*12%	$ 17,280	$ 25,920	$ 14,400	$ 57,600
Salary Allowance (C)	$ 40,000	$ 30,000	$ 80,000	$ 150,000
Total Interest and Salary (D) = B+C =	$ 57,280	$ 55,920	$ 94,400	$ 207,600
Net Income/ (loss) for the year (E)				$ 87,600
Balance Net Income (F) = (E-F) (Divided Equally)	$ (40,000)	$ (40,000)	$ (40,000)	$(120,000)
Allocated Net Income = (D+F)	$ 17,280	$ 15,920	$ 54,400	$ 87,600

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Answer 5

Chapter 12, Problem 3BPSB

Requirement-1:

To determine

To prepare: Tables showing allocation of partnership income under each of the three plans

Requirement-1:

Expert Solution

Answer to Problem 3BPSB

Solution: Tables showing allocation of partnership income under each of the three plans are as follows:

Income (Loss) Sharing Plan	Cook	Xi	Schwartz	Total
Plan-(a)	$ 80,000	$ 80,000	$ 80,000	$ 240,000
Plan-(b)	$ 72,000	$ 108,000	$ 60,000	$ 240,000
Plan-(c)	$ 68,080	$ 66,720	$ 105,200	$ 240,000

Explanation of Solution

Explanation: Tables showing allocation of partnership income under each of the three plans are explained as follows:

Plan-(a):	Cook	Xi	Schwartz	Total
Net Income/ (loss) for the year (A)				$ 240,000
Allocated Net Income/ (loss) = A/3 =	$ 80,000	$ 80,000	$ 80,000	$ 240,000

Plan-(b):	Cook	Xi	Schwartz	Total
Beginning Capital investment (A)	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Ratio (B) = (A/Total)	0.30	0.45	0.25
Net Income/ (loss) for the year (C)				$ 240,000
*Allocated Net Income/ (loss) = CB =**	$ 72,000	$ 108,000	$ 60,000	$ 240,000

Plan-(c):	Cook	Xi	Schwartz	Total
Beginning Capital investment (A)	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Interest on beginning Capital Investment (B) = A*12%	$ 17,280	$ 25,920	$ 14,400	$ 57,600
Salary Allowance (C)	$ 40,000	$ 30,000	$ 80,000	$ 150,000
Total Interest and Salary (D) = B+C =	$ 57,280	$ 55,920	$ 94,400	$ 207,600
Net Income/ (loss) for the year (E)				$ 240,000
Balance Net Income (F) = (E-F) (Divided Equally)	$ 10,800	$ 10,800	$ 10,800	$ 32,400
Allocated Net Income = (D+F)	$ 68,080	$ 66,720	$ 105,200	$ 240,000

Requirement-2:

To determine

To prepare: Statement of Partner’s Equity using the plan c

Requirement-2:

Expert Solution

Answer to Problem 3BPSB

Solution: Statement of Partner’s Equity using the plan c is as follows:

Statement of Partner's Equity
	Cook	Xi	Schwartz	Total
Beginning Capital investment	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Add: Allocated Net Income	$ 17,280	$ 15,920	$ 54,400	$ 87,600
Less: Withdrawals	$ (18,000)	$ (38,000)	$ (24,000)	$ (80,000)
Ending Capital balance	$ 143,280	$ 193,920	$ 150,400	$ 487,600

Explanation of Solution

Explanation: Statement of Partner’s Equity using the plan c is prepared as follows:

Plan-(c):	Cook	Xi	Schwartz	Total
Beginning Capital investment (A)	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Interest on beginning Capital Investment (B) = A*12%	$ 17,280	$ 25,920	$ 14,400	$ 57,600
Salary Allowance (C)	$ 40,000	$ 30,000	$ 80,000	$ 150,000
Total Interest and Salary (D) = B+C =	$ 57,280	$ 55,920	$ 94,400	$ 207,600
Net Income/ (loss) for the year (E)				$ 87,600
Balance Net Income (F) = (E-F) (Divided Equally)	$ (40,000)	$ (40,000)	$ (40,000)	$(120,000)
Allocated Net Income = (D+F)	$ 17,280	$ 15,920	$ 54,400	$ 87,600

Statement of Partner's Equity
	Cook	Xi	Schwartz	Total
Beginning Capital investment	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Add: Allocated Net Income	$ 17,280	$ 15,920	$ 54,400	$ 87,600
Less: Withdrawals	$ (18,000)	$ (38,000)	$ (24,000)	$ (80,000)
Ending Capital balance	$ 143,280	$ 193,920	$ 150,400	$ 487,600

Requirement-3:

To determine

To prepare: Closing entries to allocate the net income to partners and closing the withdrawal accounts

Requirement-3:

Expert Solution

Answer to Problem 3BPSB

Solution: Closing entries to allocate the net income to partners and closing the withdrawal accounts are as follows:

Closing entries as on Dec. 31
Account titles	Debit	Credit
Income Summary	$ 87,600
Cook's Capital		$ 17,280
Xi's Capital		$ 15,920
Schwartz's Capital		$ 54,400
(Being net income allocated to partners)

Cook's Capital	$ 18,000
Xi's Capital	$ 38,000
Schwartz's Capital	$ 24,000
Cook's Withdrawal		$ 18,000
Xi's Withdrawal		$ 38,000
Schwartz's Withdrawal		$ 24,000
(Being partner's withdrawal accounts closed)

Explanation of Solution

Explanation: Allocation of net income to partners is explained as follows:

Plan-(c):	Cook	Xi	Schwartz	Total
Beginning Capital investment (A)	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Interest on beginning Capital Investment (B) = A*12%	$ 17,280	$ 25,920	$ 14,400	$ 57,600
Salary Allowance (C)	$ 40,000	$ 30,000	$ 80,000	$ 150,000
Total Interest and Salary (D) = B+C =	$ 57,280	$ 55,920	$ 94,400	$ 207,600
Net Income/ (loss) for the year (E)				$ 87,600
Balance Net Income (F) = (E-F) (Divided Equally)	$ (40,000)	$ (40,000)	$ (40,000)	$(120,000)
Allocated Net Income = (D+F)	$ 17,280	$ 15,920	$ 54,400	$ 87,600

Answer 6

Chapter 12, Problem 3BPSB

Requirement-1:

To determine

To prepare: Tables showing allocation of partnership income under each of the three plans

Requirement-1:

Expert Solution

Answer to Problem 3BPSB

Solution: Tables showing allocation of partnership income under each of the three plans are as follows:

Income (Loss) Sharing Plan	Cook	Xi	Schwartz	Total
Plan-(a)	$ 80,000	$ 80,000	$ 80,000	$ 240,000
Plan-(b)	$ 72,000	$ 108,000	$ 60,000	$ 240,000
Plan-(c)	$ 68,080	$ 66,720	$ 105,200	$ 240,000

Explanation of Solution

Explanation: Tables showing allocation of partnership income under each of the three plans are explained as follows:

Plan-(a):	Cook	Xi	Schwartz	Total
Net Income/ (loss) for the year (A)				$ 240,000
Allocated Net Income/ (loss) = A/3 =	$ 80,000	$ 80,000	$ 80,000	$ 240,000

Plan-(b):	Cook	Xi	Schwartz	Total
Beginning Capital investment (A)	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Ratio (B) = (A/Total)	0.30	0.45	0.25
Net Income/ (loss) for the year (C)				$ 240,000
*Allocated Net Income/ (loss) = CB =**	$ 72,000	$ 108,000	$ 60,000	$ 240,000

Plan-(c):	Cook	Xi	Schwartz	Total
Beginning Capital investment (A)	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Interest on beginning Capital Investment (B) = A*12%	$ 17,280	$ 25,920	$ 14,400	$ 57,600
Salary Allowance (C)	$ 40,000	$ 30,000	$ 80,000	$ 150,000
Total Interest and Salary (D) = B+C =	$ 57,280	$ 55,920	$ 94,400	$ 207,600
Net Income/ (loss) for the year (E)				$ 240,000
Balance Net Income (F) = (E-F) (Divided Equally)	$ 10,800	$ 10,800	$ 10,800	$ 32,400
Allocated Net Income = (D+F)	$ 68,080	$ 66,720	$ 105,200	$ 240,000

Answer 7

Chapter 12, Problem 3BPSB

Requirement-1:

To determine

To prepare: Tables showing allocation of partnership income under each of the three plans

Answer 8

Requirement-1:

Expert Solution

Answer to Problem 3BPSB

Solution: Tables showing allocation of partnership income under each of the three plans are as follows:

Income (Loss) Sharing Plan	Cook	Xi	Schwartz	Total
Plan-(a)	$ 80,000	$ 80,000	$ 80,000	$ 240,000
Plan-(b)	$ 72,000	$ 108,000	$ 60,000	$ 240,000
Plan-(c)	$ 68,080	$ 66,720	$ 105,200	$ 240,000

Answer 9

Requirement-1:

Expert Solution

Answer 10

Requirement-1:

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

Explanation: Tables showing allocation of partnership income under each of the three plans are explained as follows:

Plan-(a):	Cook	Xi	Schwartz	Total
Net Income/ (loss) for the year (A)				$ 240,000
Allocated Net Income/ (loss) = A/3 =	$ 80,000	$ 80,000	$ 80,000	$ 240,000

Plan-(b):	Cook	Xi	Schwartz	Total
Beginning Capital investment (A)	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Ratio (B) = (A/Total)	0.30	0.45	0.25
Net Income/ (loss) for the year (C)				$ 240,000
*Allocated Net Income/ (loss) = CB =**	$ 72,000	$ 108,000	$ 60,000	$ 240,000

Plan-(c):	Cook	Xi	Schwartz	Total
Beginning Capital investment (A)	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Interest on beginning Capital Investment (B) = A*12%	$ 17,280	$ 25,920	$ 14,400	$ 57,600
Salary Allowance (C)	$ 40,000	$ 30,000	$ 80,000	$ 150,000
Total Interest and Salary (D) = B+C =	$ 57,280	$ 55,920	$ 94,400	$ 207,600
Net Income/ (loss) for the year (E)				$ 240,000
Balance Net Income (F) = (E-F) (Divided Equally)	$ 10,800	$ 10,800	$ 10,800	$ 32,400
Allocated Net Income = (D+F)	$ 68,080	$ 66,720	$ 105,200	$ 240,000

Answer 13

Requirement-2:

To determine

To prepare: Statement of Partner’s Equity using the plan c

Requirement-2:

Expert Solution

Answer to Problem 3BPSB

Solution: Statement of Partner’s Equity using the plan c is as follows:

Statement of Partner's Equity
	Cook	Xi	Schwartz	Total
Beginning Capital investment	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Add: Allocated Net Income	$ 17,280	$ 15,920	$ 54,400	$ 87,600
Less: Withdrawals	$ (18,000)	$ (38,000)	$ (24,000)	$ (80,000)
Ending Capital balance	$ 143,280	$ 193,920	$ 150,400	$ 487,600

Explanation of Solution

Explanation: Statement of Partner’s Equity using the plan c is prepared as follows:

Plan-(c):	Cook	Xi	Schwartz	Total
Beginning Capital investment (A)	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Interest on beginning Capital Investment (B) = A*12%	$ 17,280	$ 25,920	$ 14,400	$ 57,600
Salary Allowance (C)	$ 40,000	$ 30,000	$ 80,000	$ 150,000
Total Interest and Salary (D) = B+C =	$ 57,280	$ 55,920	$ 94,400	$ 207,600
Net Income/ (loss) for the year (E)				$ 87,600
Balance Net Income (F) = (E-F) (Divided Equally)	$ (40,000)	$ (40,000)	$ (40,000)	$(120,000)
Allocated Net Income = (D+F)	$ 17,280	$ 15,920	$ 54,400	$ 87,600

Statement of Partner's Equity
	Cook	Xi	Schwartz	Total
Beginning Capital investment	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Add: Allocated Net Income	$ 17,280	$ 15,920	$ 54,400	$ 87,600
Less: Withdrawals	$ (18,000)	$ (38,000)	$ (24,000)	$ (80,000)
Ending Capital balance	$ 143,280	$ 193,920	$ 150,400	$ 487,600

Answer 14

Requirement-2:

To determine

To prepare: Statement of Partner’s Equity using the plan c

Answer 15

Requirement-2:

Expert Solution

Answer to Problem 3BPSB

Solution: Statement of Partner’s Equity using the plan c is as follows:

Statement of Partner's Equity
	Cook	Xi	Schwartz	Total
Beginning Capital investment	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Add: Allocated Net Income	$ 17,280	$ 15,920	$ 54,400	$ 87,600
Less: Withdrawals	$ (18,000)	$ (38,000)	$ (24,000)	$ (80,000)
Ending Capital balance	$ 143,280	$ 193,920	$ 150,400	$ 487,600

Answer 16

Requirement-2:

Expert Solution

Answer 17

Requirement-2:

Expert Solution

Answer 18

Expert Solution

Answer 19

Explanation of Solution

Explanation: Statement of Partner’s Equity using the plan c is prepared as follows:

Plan-(c):	Cook	Xi	Schwartz	Total
Beginning Capital investment (A)	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Interest on beginning Capital Investment (B) = A*12%	$ 17,280	$ 25,920	$ 14,400	$ 57,600
Salary Allowance (C)	$ 40,000	$ 30,000	$ 80,000	$ 150,000
Total Interest and Salary (D) = B+C =	$ 57,280	$ 55,920	$ 94,400	$ 207,600
Net Income/ (loss) for the year (E)				$ 87,600
Balance Net Income (F) = (E-F) (Divided Equally)	$ (40,000)	$ (40,000)	$ (40,000)	$(120,000)
Allocated Net Income = (D+F)	$ 17,280	$ 15,920	$ 54,400	$ 87,600

Statement of Partner's Equity
	Cook	Xi	Schwartz	Total
Beginning Capital investment	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Add: Allocated Net Income	$ 17,280	$ 15,920	$ 54,400	$ 87,600
Less: Withdrawals	$ (18,000)	$ (38,000)	$ (24,000)	$ (80,000)
Ending Capital balance	$ 143,280	$ 193,920	$ 150,400	$ 487,600

Answer 20

Requirement-3:

To determine

To prepare: Closing entries to allocate the net income to partners and closing the withdrawal accounts

Requirement-3:

Expert Solution

Answer to Problem 3BPSB

Solution: Closing entries to allocate the net income to partners and closing the withdrawal accounts are as follows:

Closing entries as on Dec. 31
Account titles	Debit	Credit
Income Summary	$ 87,600
Cook's Capital		$ 17,280
Xi's Capital		$ 15,920
Schwartz's Capital		$ 54,400
(Being net income allocated to partners)

Cook's Capital	$ 18,000
Xi's Capital	$ 38,000
Schwartz's Capital	$ 24,000
Cook's Withdrawal		$ 18,000
Xi's Withdrawal		$ 38,000
Schwartz's Withdrawal		$ 24,000
(Being partner's withdrawal accounts closed)

Explanation of Solution

Explanation: Allocation of net income to partners is explained as follows:

Plan-(c):	Cook	Xi	Schwartz	Total
Beginning Capital investment (A)	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Interest on beginning Capital Investment (B) = A*12%	$ 17,280	$ 25,920	$ 14,400	$ 57,600
Salary Allowance (C)	$ 40,000	$ 30,000	$ 80,000	$ 150,000
Total Interest and Salary (D) = B+C =	$ 57,280	$ 55,920	$ 94,400	$ 207,600
Net Income/ (loss) for the year (E)				$ 87,600
Balance Net Income (F) = (E-F) (Divided Equally)	$ (40,000)	$ (40,000)	$ (40,000)	$(120,000)
Allocated Net Income = (D+F)	$ 17,280	$ 15,920	$ 54,400	$ 87,600

Answer 21

Requirement-3:

To determine

To prepare: Closing entries to allocate the net income to partners and closing the withdrawal accounts

Answer 22

Requirement-3:

Expert Solution

Answer to Problem 3BPSB

Solution: Closing entries to allocate the net income to partners and closing the withdrawal accounts are as follows:

Closing entries as on Dec. 31
Account titles	Debit	Credit
Income Summary	$ 87,600
Cook's Capital		$ 17,280
Xi's Capital		$ 15,920
Schwartz's Capital		$ 54,400
(Being net income allocated to partners)

Cook's Capital	$ 18,000
Xi's Capital	$ 38,000
Schwartz's Capital	$ 24,000
Cook's Withdrawal		$ 18,000
Xi's Withdrawal		$ 38,000
Schwartz's Withdrawal		$ 24,000
(Being partner's withdrawal accounts closed)

Answer 23

Requirement-3:

Expert Solution

Answer 24

Requirement-3:

Expert Solution

Answer 25

Expert Solution

Answer 26

Explanation of Solution

Explanation: Allocation of net income to partners is explained as follows:

Plan-(c):	Cook	Xi	Schwartz	Total
Beginning Capital investment (A)	$ 144,000	$ 216,000	$ 120,000	$ 480,000
Interest on beginning Capital Investment (B) = A*12%	$ 17,280	$ 25,920	$ 14,400	$ 57,600
Salary Allowance (C)	$ 40,000	$ 30,000	$ 80,000	$ 150,000
Total Interest and Salary (D) = B+C =	$ 57,280	$ 55,920	$ 94,400	$ 207,600
Net Income/ (loss) for the year (E)				$ 87,600
Balance Net Income (F) = (E-F) (Divided Equally)	$ (40,000)	$ (40,000)	$ (40,000)	$(120,000)
Allocated Net Income = (D+F)	$ 17,280	$ 15,920	$ 54,400	$ 87,600