1. Partnership : Partnership is an agreement between two or more persons for doing a business and sharing the profit from that business. The persons or parties of the partnership are known as partners and the agreement which is made for such partnership is called partnership deed. The partners share the profit and loss of the operating business as per the agreement made before entering the partnership. To determine: The distribution of net income of $240000 for the year. Calculation of income distribution among the partners is as follows: Plan Calculation C X S Total ($) (a) $240000/3 80000 80000 80000 240000 (b) $240000 x (144000/480000) 72000 - - $240000 x (216000/480000) - 108000 - $240000 x (120000/480000) - - 60000 Total of income allocated as per (b) 72000 108000 60000 240000 (c ) Total income (A) 240000 Salary allowances (B) $40,000 $30,000 $80,000 $150,000 Interest allowances 144000x12% 17280 216000x12% 25920 120000x12% 14400 Total interest allowance (C ) 17280 25920 14400 57600 Net income after distributing allowances (A-B-C) $32,400 Distributing remaining income equally (32400/3) (E ) 10800 10800 10800 32400 Balance of income $0 Shares to partners (B+C+E) $68,080 $66,720 $105,200 $240,000 2. Partnership: Partnership is an agreement between two or more persons for doing a business and sharing the profit from that business. The persons or parties of the partnership are known as partners and the agreement which is made for such partnership is called partnership deed. The partners share the profit and loss of the operating business as per the agreement made before entering the partnership. To determine: The statement of partner’s equity assuming plan (c) and net income is $87600 and withdrawals by C $18000, X $38000 and S$24000. Calculation of partner’s equity statement is as follows: Particulars C X S Total ($) Capital in the beginning 0 0 0 0 Add: Capital invested 144000 216000 120000 480000 Net income after allocation (Note 1) $17,280 $15,920 $54,400 $87,600 Less: Withdrawals (18000) (38000) (24000) ($80,000) Ending balance 143280 193920 150400 487600 Note 1: Particulars C X S Total ($) Net income (given) (A) $87600 Salary allowances (B) $40,000 $30,000 $80,000 $150,000 Interest allowances 144000x12% $17280 216000x12% $25920 120000x12% $14400 Total interest allowance (C ) $17280 $25920 $14400 $57600 Net income after distributing allowances (A-B-C) $92,400 Distributing remaining income(loss) equally (120000/3) (E ) (40000) (40000) (40000) (120000) Total net income after distribution (B+C+E) $17,280 $15,920 $54,400 $87,600 3. Partnership: Partnership is an agreement between two or more persons for doing a business and sharing the profit from that business. The persons or parties of the partnership are known as partners and the agreement which is made for such partnership is called partnership deed. The partners share the profit and loss of the operating business as per the agreement made before entering the partnership. To determine: The closing journal entries assuming plan (c) and net income of $87600 and also entry for closing withdrawals. Journal entries for closing income statement is as follows: Particulars Amount ($) Amount ($) Income account 87600 To C's capital 17280 To X's capital 15920 To S's capital 54400 (Being income from business is distributed to their capital accounts) C's capital 18000 X's capital 38000 S's capital 24000 To cash 80000 (Being withdrawals made by the partners)

Financial Accounting: Information for Decisions

8th Edition

ISBN: 9781259533006

Author: John J Wild

Publisher: McGraw-Hill Education

See similar textbooks

Concept explainers

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 …

Partner Admission and Withdrawal

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Chapter D, Problem 2PSB

Chapter D, Problem 5PSB

Students have asked these similar questions

The Smith Manufacturing Company estimates that factory overhead for the coming year will be $950,000. The company will use direct labor hours as the basis for applying factory overhead, estimated at 25,000 hours. Calculate the predetermined overhead rate.

What is the differential cost of producing product B on these accounting question?

Clayton Textiles' estimated amounts for next year are as follows: • Department 1: Manufacturing overhead costs = $80,000 Direct labor hours 180,000 DLH . ⚫ Department 2: ⚫ Manufacturing overhead costs = $110,000 Direct labor hours = 230,000 DLH What is the company's plantwide overhead rate if direct labor hours are the allocation base?

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

SEE MORE QUESTIONS

Recommended textbooks for you

Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
SWFT Comprehensive Vol 2020
Accounting
ISBN:9780357391723
Author:Maloney
Publisher:Cengage
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
SWFT Comprehensive Volume 2019
Accounting
ISBN:9780357233306
Author:Maloney
Publisher:Cengage
SWFT Essntl Tax Individ/Bus Entities 2020
Accounting
ISBN:9780357391266
Author:Nellen
Publisher:Cengage
College Accounting, Chapters 1-27
Accounting
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:Cengage Learning,