Question

Fred and Dorothy operate an accounting firm as partners. on 1 March 2020, they admitted a...

Fred and Dorothy operate an accounting firm as partners. on 1 March 2020, they admitted a new partner into their partnership. the terms of the agreement provided that the profits of the partnership be shared equally. The partnership's net income for the year ended 30 june 2020 was $200,000. assume that the net income of the partnership was spread equally over the 12 months.

Fred's wife, Jenny, is employed as a receptionist by the partnership from 1 july 2019 to 30 june 2020. Over the 12 months, she was paid $100,000. However, the Commissioner of Taxation disallowed $20,000. Calculate each partner's share of net income from the partnership and calculate the net income of the partnership for the year ended 30 june 2020.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

SOLUTION

NET INCOME OF PARTNERSHIP FOR THE YEAR ENDING 30 JUNE 2020  AFTER DISALLOWANCE BY COMMISSIONER OF TAXATION =$200,000+$20000=$2,20,000

NOTE EXPENSES DISALLOWED WILL BE ADDED TO NET INCOME

EACH PARTNER SHARE IN NET INCOME

PROFIT DISTRIBUTION TILL1 MARCH BEFORE ADMISSION OF NEW PARTNER

PROFIT FROM 1 ST JULY TO 1 ST OF MARCH 2020 = $220,000*8/12 =$146,667 DIVIDED EQUALLY AMONG FRED AND DOROTHY

FRED SHARE =146,667/2=$73,333

DOROTHY SHARE = 146,667/2=$73,334

DISTRIBUTION OF PROFIT FROM 1 MARCH TILL 30 JUNE 2020(220,000-146,667 =$73.333) IN EQUAL RATIO

FRED SHARE =73,333/3=$24,444

DOROTHY SHARE = 73,333/3=$24,444

NEW PARTNER SHARE =73333/3= $24,445

TOTAL SHARE IN PROFIT

FRED SHARE =73,333+24,444=$97,777

DOROTHY SHARE =73333+24,444=$97,777

NEW PARTNER SHARE =$24,445

NOTE -PLEASE UPVOTE IT SHALL BE A GREAT FAVOR THANKS

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Fred and Dorothy operate an accounting firm as partners. on 1 March 2020, they admitted a...
Fred and Dorothy operate an accounting firm as partners. on 1 March 2020, they admitted a new partner into their partnership. the terms of the agreement provided that the profits of the partnership be shared equally. The partnership's net income for the year ended 30 june 2020 was $200,000. assume that the net income of the partnership was spread equally over the 12 months. Fred made a loan of $50,000 to the partnership on 1 may 2020 to fund its...
Annie and Brad are partners in the A&B Accounting Practice, located in Hawthorn. The partnership’s accounting...
Annie and Brad are partners in the A&B Accounting Practice, located in Hawthorn. The partnership’s accounting profit for the year ending 30 June 2020 was $150,000 after the following items were expensed: Interest paid on an advance from Brad                    $5,000 Salary paid to Annie                                                   $21,000 The partnership agreement provides that the partners are share profits and losses equally after allowing for salaries and interest on partners’ capital accounts. Required: a) Calculate the net income of the partnership for...
1) Jo is a Canadian citizen. In March of 2020, Jo's employer transferred Jo to the...
1) Jo is a Canadian citizen. In March of 2020, Jo's employer transferred Jo to the United States. Jo's spouse and child moved with Jo at that time. Jo chose not to sell the family's home, and instead, now lends it to extended family from overseas during the winter months. Jo has five weeks of vacation each summer, at which time the family returns to Canada and stay in their house. Jo did not cancel a long-standing country club membership,...
On January 1, 2020, Sweet Co. purchased 24,000 shares (a 10% interest) in Elton John Corp....
On January 1, 2020, Sweet Co. purchased 24,000 shares (a 10% interest) in Elton John Corp. for $1,300,000. At the time, the book value and the fair value of John’s net assets were $12,900,000. On July 1, 2021, Sweet paid $2,890,000 for 48,000 additional shares of John common stock, which represented a 20% investment in John. As a result of this transaction, Sweet owns 30% of John and can exercise significant influence over John’s operating and financial policies. (Any excess...
On January 1, 2020, Sheridan Co. purchased 24,000 shares (a 10% interest) in Elton John Corp....
On January 1, 2020, Sheridan Co. purchased 24,000 shares (a 10% interest) in Elton John Corp. for $1,360,000. At the time, the book value and the fair value of John’s net assets were $13,400,000. On July 1, 2021, Sheridan paid $3,350,000 for 48,000 additional shares of John common stock, which represented a 20% investment in John. As a result of this transaction, Sheridan owns 30% of John and can exercise significant influence over John’s operating and financial policies. (Any excess...
On January 1, 2020, Bridgeport Co. purchased 24,000 shares (a 10% interest) in Elton John Corp....
On January 1, 2020, Bridgeport Co. purchased 24,000 shares (a 10% interest) in Elton John Corp. for $1,450,000. At the time, the book value and the fair value of John’s net assets were $12,000,000. On July 1, 2021, Bridgeport paid $2,740,000 for 48,000 additional shares of John common stock, which represented a 20% investment in John. As a result of this transaction, Bridgeport owns 30% of John and can exercise significant influence over John’s operating and financial policies. (Any excess...
On January 1, 2020, Swifty Co. purchased 25,000 shares (a 10% interest) in Elton John Corp....
On January 1, 2020, Swifty Co. purchased 25,000 shares (a 10% interest) in Elton John Corp. for $1,270,000. At the time, the book value and the fair value of John’s net assets were $12,800,000. On July 1, 2021, Swifty paid $3,040,000 for 50,000 additional shares of John common stock, which represented a 20% investment in John. As a result of this transaction, Swifty owns 30% of John and can exercise significant influence over John’s operating and financial policies. (Any excess...
1. Admitting New Partners Who Buy an Interest and Contribute Assets The capital accounts of Trent...
1. Admitting New Partners Who Buy an Interest and Contribute Assets The capital accounts of Trent Henry and Tim Chou have balances of $187,500 and $135,200, respectively. LeAnne Gilbert and Becky Clarke are to be admitted to the partnership. Gilbert buys one-fifth of Henry’s interest for $43,100 and one-fourth of Chou’s interest for $29,700. Clarke contributes $45,800 cash to the partnership, for which she is to receive an ownership equity of $45,800. a1. Journalize the entry to record the admission...
2015: Matthew and Michael Goode (cousins) decide to form a partnership (M&M) on April 1, 2015....
2015: Matthew and Michael Goode (cousins) decide to form a partnership (M&M) on April 1, 2015. Each contributed personally-owned assets to start the new company. Matthew Goode contributed $100,250 in cash and property with book value of $57,750 and appraised value of $78,750. Michael Goode contributed cash of $99,750; computer equipment with book value of $52,500 and appraised value of $21,000; a software library with book value of $63,000 and appraised value of $23,500; and office equipment with book value...
Revision Questions 1.     Non-Current Assets Provide the journal entries for the following transaction: Matthew built a...
Revision Questions 1.     Non-Current Assets Provide the journal entries for the following transaction: Matthew built a new building to store supplies for his business. The builder charged $250,000, the electrician cost $10,000 and a painter cost 5,000. A compulsory fire safety inspection was conducted and cost $1,000. Matthew is still worried about the building burning down and has purchased 12 months insurance for $10,000 which covers the value of the building in case of destruction. Matthew calculated that the above...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT