Income of a partnership firm is allocated on the basis of the terms agreed upon in the partnership agreement. The partnership agreement indicates the allocation of net income of the partnership. The agreement provides for interest, salaries and profits sharing ratio for the partners. To determine: the share of net income for each partner. The share of net income for each partner is as follows: Partner S Partner B Partner's share of net income $ 23,500 $ 28,500 The share of net income for each partner is calculated as follows: Partner S Partner B Total Net income (A) $52,000 Salary (B) $ 15,000 $ 20,000 $35,000 Balance net income shared equally (C) = (A-B) $ 8,500 $ 8,500 $17,000 Partner's share of net income (B+C) $ 23,500 $ 28,500 $52,000

Connect Access Card for Financial Accounting: Information and Decisions

8th Edition

ISBN: 9781259662966

Author: John J Wild

Publisher: McGraw-Hill Education

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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

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