Accounting and Financial Reporting II
A partnership comprised of two partners has the following information regarding income and loss allocation:
Partner #1 Partner #2
Initial investment 30,000 40,000
Salary allowance 25,000 20,000
Interest allowance in initial investment 10% 10%
Remainder 50% 50%
In its first year of business, the partnership generates an income of 80,000. Prepare a schedule showing how much income should be allocated to each partner.
Prepare a schedule showing how much income should be allocated to each partner.
Partner #1 | Partner #2 | Total | |
Salary allowance | 25000 | 20000 | 45000 |
interest | |||
Partner 1 (30000*10%) | 3000 | ||
Partner 2 (40000*10%) | 4000 | ||
Total interest | 7000 | ||
Total salary and interest | 28000 | 24000 | 52000 |
Remaining income (80000-52000) = 28000 | |||
Partner #1 (28000*50%) | 14000 | ||
Partner #2 (28000*50%) | 14000 | ||
Total remainder | 28000 | ||
Total division | 42000 | 38000 | 80000 |
Get Answers For Free
Most questions answered within 1 hours.