McGill and Smyth have capital balances on January 1 of $50,000 and $40,000, respectively. The partnership income-sharing agreement provides for (1) annual salaries of $22,000 for McGill and $13,000 for Smyth, (2) interest at 10% on beginning capital balances, and (3) remaining income or loss to be shared 60% by McGill and 40% by Smyth. Prepare a schedule showing the distribution of net income, assuming net income is $50,000

McGill and Smyth have capital balances on January 1 of $50,000 and $40,000, respectively. The partnership income-sharing agreement provides for (1) annual salaries of $22,000 for McGill and $13,000 for Smyth, (2) interest at 10% on beginning capital balances, and (3) remaining income or loss to be shared 60% by McGill and 40% by Smyth. Prepare a schedule showing the distribution of net income, assuming net income is $50,000

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter19: Accounting For Partnerships

Section: Chapter Questions

Problem 2CE

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Item No. 19 is based on the following information: On January 1, 200C, Bee and Gees had capital balances of P 250,000 and P 200,000, respectively. Their profit and loss sharing agreement has the following provisions: Annual salary of P 200,000 to Gees and P 90,000 to Bee; 10% interest on the opening capital; O The remainder of the profit is to be divided equally. 19. If the profit for the year 200C was P 120,000, how much was the share of Bee? a. P 62,500. c. P112,500. b. P 87,500. d. P 117,500.
Partners A, B, and C have a profit and loss agreement with the following provisions: salaries of $13,000 and $12,000 for A and C, respectively; a bonus to C of 10% of net income after bonus; and interest of 6% on ending capital in excess of $100,000. Ending capital balance is $80,000 for A, $150,000 for B, and $110,000 for C. Remaining profit/loss is allocated to A, B, C in the ratio of 2:1:1. If the partnership had net income of $22,000, how much should be allocated to Partner C? Select one: 14,600 8,700 850 12,450
The following information was taken from the books of Newcastle Enterprises. Balances in the general ledger of Newcastle Enterprises for the financial year ended 29 February 2020. See attatched 4.JPG Appropriations according to the partnership agreement for the financial year ended 29 February 2020: Interest on capital must be appropriated at 5% per annum. Capital account balances remain constant. Interest on drawings must be appropriated at 12% per annum. Assume drawings were made 3 months prior to the end of the financial year. Interest on current accounts must be appropriated at 7% per annum (on opening balances) 4. Both partners must receive an annual salary at the end of the financial year as follows: - M. Manchester – R65 000 - L. Liverpool – R45 000 5. L. Liverpool must receive an annual bonus of R10 000 at the end of the financial year. 6. R35 000 must be transferred to the replacement reserve at the end of the financial year. 7. The remaining profit…
14. The net income agreement for Molina and Serraon states net income and net loss shall be divided in a ratio of 4:6, respectively. The net loss for the current year is P50,000. On January 1 of the current year, the capital balances were as follows: Molina, P55,000; and Serraon, P65,000. During the current year Molina withdrew P40,000 and Serraon withdrew P25,000. Compute the capital balances as of December 31 of the current year. Molina, capital debit of P5,000 Serraon, capital credit of P10,000 a. b. credit of P35,000 credit of P70,000 credit of P5,000 С. credit of P10,000 d. none of the above
AA and BB have been partners for a decade. As of January 1, 2022, the capital balances of AA and BB are: AA capital P55,000 BB. 75,000 capital Partnership agreement provides for the following manner of profit distribution: • Annual salaries of P80,000 and P100,000 will be provided to AA and BB. respectively A bonus of 20% based on net income will be given to AA -30% of the remaining profit or loss is distributed to AA with the balance provided to BB In 2022, the partnership reported net income of P250,000. On January 1, 2023, CC was admitted as a partner by investing P70,000 for a 25% interest in the capital of the partnership. The partners agreed that the plant assets of the partnership were to be increased by P30,000. The profit and loss sharing agreement was revised to: . Annual salaries of P80,000, P100,000 and P70,000 will be provided to AA BB and CC, respectively. • A bonus of 20% based on net income will be given to AA and a 5% bonus based on net income after A's…
Net income for Costmore Sales for the year ended December 31, 2021, was P52,000. The partners, Johnson and Lindstrom, have the following capital balances: Capital Balance Johnson Lindstrom Original capital contribution 100,000 100,000 As of Dec 31, 2021 122,000 128,000 Average in 2021 110,000 115,000 a. If there was no agreement as to the distribution of profits or losses, how much of the net income will be allocated to Johnson? (1) 26000 To Lindstrom? (2) 26000 b. If partnership profits are distributed according to ending capital balance, how much of the net income will be allocated to Johnson? (3) 25376 To Lindstrom? (4) 26624 C. If partnership profits are distributed according to an arbitrary ratio of 65:35 to Johnson and Lindstrom respectively, how much of the net income will be allocated to Johnson? (5) 33800 . To Lindstrom? (6) 18200 d. Assume that instead of earning a net income of P52,000, the partnership incurred losses of P30,000. The partnership agreement calls for…
Cue and Peed entered into a partnership on March 1, 200A. They agreed that Cue, the managing partner was to receive a salary allowance of P 24,000 per year and a bonus of 10% of the net profit after the salary allowance but before the bonus. The balance is to b e distributed in the ratio of their initial capital. Selected ledger accounts on December 31, 200A prior to adjustments showed the following balances: 3.14 Sales P 300,000 3,000 180,000 48,000 200,000 20,000 100,000 10,000 Sales Returns Purchases Operating Expenses Cue Capital Cue Drawing Peed Capital Peed Drawing Inventories at year-end were as follows: Office supplies, P 810 and merchandise, P 50,000. Prepaid insurance of P 1,200 and accrued expenses of P 400 are to be recognized. Depreciation of P 4,000 is to be provided. REQUIRED: Prepare the Statement of Partners' Equity for the 10- month period ended December 31, 200A.
Item No. 25 is based on the following information: Ree, Ver, and Kwai are partners having capital balances of P 180,000, P 120,000, and P 200,000, respectively on January 1, 200B. Their profit and loss sharing agreement provides for the following: o Salary allowance of P 60,000 each; Bonus of 20% of the profit after salaries and bonus; and o Remainder is to be divided 6:2:2. The bonus is to be split between Ver and Kwai. During 200B, the partnership earned profit of P 276,000. 25. Assuming all the partners withdrew their salary allowances during the year, how much would be the capital balance of Ver on December 31, 200B? a. P 84,000. c. P 144,000. b. P 120,000. d. P 204,000.
The following information was taken from the books of Newcastle Enterprises. Balances in the general ledger of Newcastle Enterprises for the financial year ended 29 February 2020. (attatched 4.JPG) Appropriations according to the partnership agreement for the financial year ended 29 February 2020: Interest on capital must be appropriated at 5% per annum. Capital account balances remain constant. Interest on drawings must be appropriated at 12% per annum. Assume drawings were made 3 months prior to the end of the financial year. Interest on current accounts must be appropriated at 7% per annum (on opening balances). 4. Both partners must receive an annual salary at the end of the financial year as follows: - M. Manchester – R65 000 - L. Liverpool – R45 000 5. L. Liverpool must receive an annual bonus of R10 000 at the end of the financial year. 6. R35 000 must be transferred to the replacement reserve at the end of the financial year. 7. The remaining…
Pearson andMurphy have partner capital balances, at book value, of $45,000 and $65,000 as of December 31. Pearson is allocated 60% of profits or losses, and Murphy is allocated the balance. The partners believe that tangible net assets have a market value in excess of book value in the amount of $30,000 net. The $30,000 is allocated as follows: Book Value Market Value Accounts receivable . . . . . . . . . $120,000 $102,000 Inventory . . . . . . . . . . . . . . . . . . 200,000 258,000 Warranty obligations . . . . . . . . 20,000 30,000 They are considering admitting Warner to the partnership in exchange for total consideration of $84,000 cash. In exchange for the consideration, Warner will receive a 30% interest in capital and a 35% interest in profits. 1. Prepare the entries associated with the admission of Warner to the partnership under the goodwill method. 2. If the goodwill…
The capital accounts of Scott and Tucker at the end of the fiscal year 2019 are as follows: Scott, Capital January 1 Balance P210,000 May 1 Investment 90,000 October 1 Withdrawal P60,000 Tucker, Capital January 1 Balance April 1 Withdrawal P30,000 P150,000 The partnership profit for the year ended December 31, 2019 was P300,000. Instruction: Prepare schedule of profit allocation and journal entries to record transfer to profit to the capital accounts under each of the following independent assumptions: 1. Profit is divided 60% to Scott and 40% to Tucker. 2. Profit is divided into ratio of capital balances at the beginning of the period. 3. Profit is divided in the ratio of average capital balance. 4. Interest of 8% is allowed on the average capital and the balance of profit is divided equally. 5. Salaries of P60,000 and P48,000 are allowed to Scott and Tucker, respectively, and the balance of the profit is divided in the ratio of capital balances at the end of the period. 6. Scott is…
2. The parthership agreement of Zuniga, Armenta & Galang provided for the year-end allocation of profit in the following order: First, Zuniga is to receive 10% of profit up to P200,000 and 20% over P200,000. Second, Armenta and Galang each are to receive 5% of the remaining profit over P300,000. The balance of profit is to be allocated equally among the three partners. The partnership's 2019 profit was P500,000 before any allocations to partners. What amount should be allocated to Zuniga?