Homework Answers
Information Given -
On December 31, 2017, NBS Company's accounts show the following -
| Partner | Drawings | Capital |
| Art Niensted | $23000 | $48000 |
| Greg Bolen | $14000 | $30000 |
| Krista Sayler | $10000 | $25000 |
.
Answer - Part - (a) - Journal Entries for independent Assumptions -
Assumption - (1) - Net income is $30000. Income is shared 6:3:1
| Particulars | Debit ( $ ) | Credit ( $ ) |
|
Income Summary Art Niensted [ $30000 * (6 / 10) ] Greg Bolen [ $30000 * (3 / 10) ] Krista Sayler [ $30000 * (1 / 10) ] |
30000 - - - |
- 18000 9000 3000 |
| Total | 30000 | 30000 |
Assumption - (2) - Net income is $40000. Niensted and Bolen are given salary allowances of $15000 and $10000, respectively The remainder is shared equally.
| Particulars | Debit ( $ ) | Credit ( $ ) |
|
Income Summary Art Niensted [ $15000 + $5000 ** ] Greg Bolen [ $10000 + $5000 ** ] Krista Sayler [ $5000 ** ] ** [ Balance amount shared equally = ($40000 - $15000 - $10000) / 3 ] = $5000 |
40000 - - - |
- 20000 15000 5000 |
| Total | 40000 | 40000 |
Assumption - (3) - Net income is $19000. Each partner is allowed interest of 10% on beginning capital balances. Niensted is given a $15000 salary allowance. The remainder is shared equally
| Particulars | Debit ( $ ) | Credit ( $ ) |
|
Income Summary Art Niensted [ $15000 + ($48000*10%) - $2100 ** ] Greg Bolen [ ($30000*10%) - $2100 ** ] Krista Sayler [ $25000*10%) - $2100** ] ** [ Balance amount shared equally = ($19000 - $15000 - $4800 - $3000 - $2500) / 3 ] = -$2100 |
19000 - - - |
- 17700 900 400 |
| Total | 19000 | 19000 |
.
Answer - Part - (b) -
Schedule showing the division of Net income under Assumption - (3)
| Particulars | Amount in ( $ ) | |||
| Art Niensted | Greg Bolen | Krista Sayler | Total | |
| Salary | 15000 | - | - | 15000 |
| Interest ( 10% on beginning capital balances ) |
4800 [ 48000 * 10% ] |
3000 [ 30000 * 10% ] |
2500 [ 25000 * 10% ] |
10300 |
| Balance amount shared equally = [($19000 - $15000 - $4800 - $3000 - $2500) / 3 ] | -2100 | -2100 | -2100 | -6300 |
| Total | 17700 | 900 | 400 | 19000 |
.
Answer - Part - (c) -
Partners' Capital statement for the year under Assumption - (3)
| Particulars | Amount in ( $ ) | ||
| Art Niensted | Greg Bolen | Krista Sayler | |
| Partners' Capital at the Beginning | 48000 | 30000 | 25000 |
| Drawings | (23000) | (14000) | (10000) |
| Share in Net income [Refer part - (b) working for calculations] | 17700 | 900 | 400 |
| Partners' Capital at the End [Capital at the Beginning - Drawings + Share in Net income] | 42700 | 16900 | 15400 |
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