Question

The Blossom Partnership reported profit of $62,700 for the year ended February 28, 2021. Salary allowances are $54,800 for H. Mills and $26,900 for S. Stone. Interest allowances of 6% are calculated on each partner's opening capital account balance. Capital account balances at March 1, 2020, were as follows: H. Mills $72,400 (Cr.) and S. Stone $47,600 (Cr.). Any remainder is shared equally.

Calculate the division of profit to each partner.

		H. Mills		S. Stone
Profit allocated to partners		$enter a dollar amount		$enter a dollar amount

Answer 1

	H. Mills	S. Stone
Profits allocated to partners	$46,044	$16,656

• Workings

	H. Mills	S. Stone	Net Income allocated	Un-allocated Net Income
Net Income				$62,700
Salary Allowance	$54,800	$26,900	$81,700	($19,000)
Interest on Capital	$4,344	$2,856	$7,200	($26,200)
Remaining net income (loss) distributed in equal ratio	($13,100)	($13,100)	($26,200)	$0
Profits allocated to partners	$46,044	$16,656	$62,700