Question

Required information Problem 12-4A Partnership income allocation, statement of partners' equity, and closing entries LO P2 [The following information applies to the questions displayed below.] Mo, Lu, and Barb formed the MLB Partnership by making investments of $84,600, $329,000, and $526,400, respectively. They predict annual partnership net income of $550,500 and are considering the following alternative plans of sharing income and loss: (a) equally; (b) in the ratio of their initial capital investments; or (C) salary allowances of $87,600 to Mo, $65,700 to Lu, and $99,500 to Barb; interest allowances of 10% on their initial capital investments; and the remaining balance shared as follows: 20% to Mo, 40% to Lu, and 40% to Barb. Problem 12-4A Part 2 2. Prepare a statement of partners' equity showing the allocation of income to the partners assuming they agree to use plan c, that income earned is $550,500, and that Mo, Lu, and Barb withdraw $45,300, $59,300, and $75,300, respectively, at year-end. (Do not round intermediate calculations. Enter all allowances as positive values. Enter losses as negative values.)

Answer 1

Solution:

Marvel Medial LLC
Statement of Member's Equity
For year ended December 31' 20Y2
Particulars	Mo	Lu	Barb	Total
Initial balances	$84,600.00	$3,29,000.00	$5,26,400.00	$9,40,000.00
Add: Net Income for the year
Salary Allowance	$87,600.00	$65,700.00	$99,500.00	$2,52,800.00
Interest Allowance	$8,460.00	$32,900.00	$52,640.00	$94,000.00
Balnace	$40,740.00	$81,480.00	$81,480.00	$2,03,700.00
Total Net Income	$1,36,800.00	$1,80,080.00	$2,33,620.00	$5,50,500.00
Total	$2,21,400.00	$5,09,080.00	$7,60,020.00	$14,90,500.00
Less: Member's Withdrawl	$45,300.00	$59,300.00	$75,300.00	$1,79,900.00
Ending balance	$1,76,100.00	$4,49,780.00	$6,84,720.00	$13,10,600.00