The partnership agreement of Jones, King, and Lane provides for the annual allocation of the business's profit or loss in the following sequence: • Jones, the managing partner, receives a bonus equal to 15 percent of the business's profit. • Each partner receives 10 percent interest on average capital investment. • Any residual profit or loss is divided equally. The average capital investments for 2021 were as follows: Jones King Lane The partnership earned $84,000 net income for 2021. Prepare a schedule showing how the 2021 net income should be allocated to the partners. (Loss amounts should be indicated with a minus sign.) Net income Bonus Interest $ 190,000 380,000 570,000 Remainder to allocate Total allocation Jones King Lane Total
The partnership agreement of Jones, King, and Lane provides for the annual allocation of the business's profit or loss in the following sequence: • Jones, the managing partner, receives a bonus equal to 15 percent of the business's profit. • Each partner receives 10 percent interest on average capital investment. • Any residual profit or loss is divided equally. The average capital investments for 2021 were as follows: Jones King Lane The partnership earned $84,000 net income for 2021. Prepare a schedule showing how the 2021 net income should be allocated to the partners. (Loss amounts should be indicated with a minus sign.) Net income Bonus Interest $ 190,000 380,000 570,000 Remainder to allocate Total allocation Jones King Lane Total
Chapter15: Partnership Accounting
Section: Chapter Questions
Problem 1PA: The partnership of Tatum and Brook shares profits and losses in a 60:40 ratio respectively after...
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Transcribed Image Text:The partnership agreement of Jones, King, and Lane provides for the annual allocation of the business's profit or loss in the following
sequence:
• Jones, the managing partner, receives a bonus equal to 15 percent of the business's profit.
• Each partner receives 10 percent interest on average capital investment.
Any residual profit or loss is divided equally.
The average capital investments for 2021 were as follows:
Jones
King
Lane
The partnership earned $84,000 net income for 2021. Prepare a schedule showing how the 2021 net income should be allocated to
the partners. (Loss amounts should be indicated with a minus sign.)
Net income
Bonus
Interest
$ 190,000
380,000
570,000
Remainder to allocate
Total allocation
Jones
King
Lane
Total
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