Question

Ashley F. and Charles K.’s partnership earns $300,000 of net income for the 20Y5 fiscal year endingMarch 31, 20Y5. Revenues totaled $750,000 and expenses totaled $450,000. The partnershipagreement states that net income should be allocated to partners according to the services providedto the partnership, with any remaining net income also allocated according to the contributions ofservices provided. Ashley F. receives a $5,200 monthly allowance, while Charles K. receives a $5,750monthly allowance. Determine the amount allocated to each partner and prepare the journal entry torecord the division of net income. Round percentages and answers to two decimal places.

Answer 1

Particulars	$( Ashley F)	$(Charles K)
Monthly allowance(5,200 x12), (5,750 x 12) Allocation of remaining income( $ 300,000-62,400-69,000)=1,68,600	62,400 80,066.75	69,000 88,534.24

Calculation of allocation of remaining income

Remaining income is allocated according to ratio of monthly allowance

Ashley F= (5,200 x 168,600) / 10,950= $ 80,066.75

Charles K=(5,750 x 168,600) / 10,950=$ 88,534.24

Figure of 10,950 is calculated as $5,200 + $5,750

JOURNAL

Particulars	Debit	Credit
Monthly Allowance A/C To Ashley F To Charles K Income Statement A/C To Ashley F To Charles K	131,400 168,600	62,400 69,000 80066.75 88534.24