Allocation of profit and loss to partners: Allocation of profit and loss to partners will be in accordance with partnership agreement. If the entity does not have formal partnership agreement, section 401 of the UPA 1997 indicates that profit and losses are distributed equally among partners. Profit distributions are not included in the partnership’s income statement, but recorded directly into partner’s capital accounts, not treated as expense items. To choose: the correct answer to determine the amount of earnings credited to each partners capital account.

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Chapter 15, Problem 15.16.8P

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Allocation of profit and loss to partners: Allocation of profit and loss to partners will be in accordance with partnership agreement. If the entity does not have formal partnership agreement, section 401 of the UPA 1997 indicates that profit and losses are distributed equally among partners. Profit distributions are not included in the partnership’s income statement, but recorded directly into partner’s capital accounts, not treated as expense items.

To choose:the correct answer to determine the amount of earnings credited to each partners capital account.

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Required information [The following information applies to the questions displayed below.] Ramer and Knox began a partnership by investing $60,000 and $90,000, respectively. During its first year, the partnership earned $160,000. Prepare calculations showing how the $160,000 income is allocated under each separate plan for sharing income and loss. 2. The partners agreed to share income and loss in proportion to their initial investments. Net income is $160,000. Note: Do not round intermediate calculations. Fraction to Allocate Ramer Ramer's Share Fraction to Allocate Knox's Share of Total Income of Income Knox Income Allocated $125,000 / $50,000 $125,000/ $75,000 $50,000/ $125,000 $50,000/ $75,000 $ 0

Required information [The following information applies to the questions displayed below.] Ramer and Knox began a partnership by investing $60,000 and $90,000, respectively. During its first year, the partnership earned $160,000. Prepare calculations showing how the $160,000 income is allocated under each separate plan for sharing income and loss. 2. The partners agreed to share income and loss in proportion to their initial investments. Net income is $160,000. Note: Do not round intermediate calculations. Fraction to Allocate Ramer $60,000/ $150,000 X Answer is complete but not entirely correct. Ramer's Share of Income $ 160,000 X Fraction to Allocate Knox $90,000/ $150,000 $ Knox's Share of Income 160,000 Total Income Allocated $ 320,000

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