Question

Problem 12-02A a-c (Part Level Submission) (Video) At the end of its first year of operations on December 31, 2020, Cullumber Company's accounts show the following. Partner Art Niensted Greg Bolen Krista Sayler Drawings $23,300 13,800 10,900 Capital $41,500 33,000 27,500 The capital balance represents each partner's initial capital investment. Therefore, net income or net loss for 2020 has not been closed to the partners' capital accounts. To record the division of net income for the year 2020 under each of the following independent assumptions. 1. Net income is $29,200. Income is shared 6:3:1. 2. Net income is $40,900. Niensted and Bolen are given salary allowances of $14,600 and $10,700, respectively. The remainder is shared equally. 3. Net income is $19,200. Each partner is allowed interest of 10% on beginning capital balances. Niensted is given a $15,300 salary allowance. The remainder is shared equally. (a) Prepare a schedule showing the division of net income under assumption (3) above. (If an amount reduces the account balance then enter with a negative sign preceding the number e.g. -15,000 or parenthesis e.g. (15,000).) DIVISION OF NET INCOME Art Niensted Greg Bolen Krista Sayler _ Total Salary allowance Interest allowance on capital Total salaries and interest Remaining excess/ deficiency Total division of net income Click if you would like to Show Work for this question: Open Show Work

Answer 1

--Requirement [a] Assumption [3] asked

	Art Niensted	Greg Bolen	Krista Sayler	Total
Salary Allowance	$15,300			$15,300
Interest allowance on capital	$4,150	$3,300	$2,750	$10,200
Total salaries & interest	$19,450	$3,300	$2,750	$25,500
Remaining deficiencies	($2,100)	($2,100)	($2,100)	($6,300)
Total division of net income	$17,350	$1,200	$650	$19,200

--Working

	Art Niensted	Greg Bolen	Krista Sayler
Salary Allowance	15300
Interest allowance on capital	=41500*10%	=33000*10%	=27500*10%
Total salaries & interest	$19,450	$3,300	$2,750
Remaining deficiencies [$19200 – 25500 = $ (6300) to be shared equally]	=-6300*1/3	-6300*1/3	-6300*1/3
Total division of net income	$17,350	$1,200	$650