Question

On January 1, 2017, the dental partnership of Angela, Diaz, and Krause was formed when the partners contributed $47,000, $75,000, and $77,000, respectively. Over the next three years, the business reported net income and (loss) as follows: 2017 $ 87,000 2018 59,000 2019 (42,000 ) During this period, each partner withdrew cash of $19,000 per year. Krause invested an additional $4,000 in cash on February 9, 2018. At the time that the partnership was created, the three partners agreed to allocate all profits and losses according to a specified plan written as follows: Each partner is entitled to interest computed at the rate of 10 percent per year based on the individual capital balances at the beginning of that year. Because of prior work experience, Angela is entitled to an annual salary allowance of $14,000 per year and Diaz is entitled to an annual salary allowance of $10,700 per year. Any remaining profit will be split as follows: Angela, 20 percent; Diaz, 45 percent; and Krause, 35 percent. If a net loss remains after the initial allocations to the partners, the balance will be allocated: Angela, 30 percent; Diaz, 55 percent; and Krause, 15 percent. Determine the ending capital balance for each partner as of the end of each of these three years. (Do not round intermediate calculations. Round your final answers to the nearest dollar amount.)

Answer 1

solution Partners Capital accounts for 2017 : Angela Diaz Krause 47000 75000 77000 4700 7500 7700 1. Beginning balance Interest on capital | Salary Share of profit Drawing 1400D totoo 8480 19080 14540 -19000 - 19000 - 19000

Ending Balance 55120 43220 80540 Available put for dis4 bulion in 2017 - projet corned - Interest on capitale, - salary of partnere 87000 - 19900 - 1-47700 42.400 Angela's share of profit = 42400% 20% = 2480 Diar's Share of proft - 42400 * 45% = 19050 Krause's Share of profit = 424004 35% = 14840 Partners copital accounts for 2018 : plaz Krause 55140 93280 80540 651% 9328 6054 Beginning Balance Interest on capital Sruary Share of profet 14.000 10700 2) 80 5130 3990 Drawing - 19000 - 19000 - 19000 4000 Addittoral capital Ending balance 67978 99438 11584 Available profet for distribution in 2018 & profit earned - Interest on capitals - Salary of 9000 - 22900 - 24700 partners 11400

Dlaz Krause Angela's share of profit = 11400 * 20% = 2280 Diaz's share of profit - 11400 X 45%. = 5130 Krause's share of profit = 11400 X 35% = 3990 Partner's copetal accounts for 2019. Angela Beginning balance 57978 Interest on capital Salary share of Loss Drawings Ending Balonce 99438 77584 5798 4944 7758 12000 10700 -270cc 49610 -13520 -19000 19000 - 19000 31216 51472 52812 Available - Interest on partners toss for distribution in 2019 - projet earned Capitals - Salary of 5 - 42000 - 23500 - 24700 -90200 90200x 30% = 27060 Angela's share of loss - Diat's share of Loss = Krause's share of loss = 90200 x 55% = 49610 90100 x 15% = 13530