Question

5) Copote and Parsons formed a partnership with capital contributions of $60,000 and $90,000 respectively. Their partnership agreement called for Copote to receive a $12,000 annual salary allowance, and each partner to receive a share of profit equal to a 10% return on capital investments. The remaining income or loss is to be divided 40% to Copote and 60% to Parsons. If the profit for the year is $84,000, what are Copote's and Parson's respective shares? 6) Gillian and Emily invested $90,000 and $130,000, respectively, in a partnership they began one year ago. Assuming the partnership's profit was $250,000 for this year, calculate the share of the profit each partner should receive under the following assumptions. (1) The partnership agreement specifies a salary allowance of $50,000 to Gillian and $60,000 to Emily, and the balance shared equally. (2) The partnership agreement specifies a salary allowance of $45,000 to Gillian and $60,000 to Emily, 10% interest on their investments, and the balance shared equally. 7) Armstrong is anxious to leave the JT Partnership. At this time her capital account is $48,000. The remaining partners, Tanner and Jackson, agree to pay Armstrong $40,000 in cash. Prepare the journal entry to record the withdrawal. Assume the partners have no agreement for sharing profits and losses. 8) Armstrong plans to leave the JT Partnership. At this time her capital account is $48,000. The remaining partners, Tanner and Jackson, agree to pay Armstrong $58,000. Prepare the journal entry to record the withdrawal. Assume the partners have no agreement for sharing profits and losses.

Answer 1

Answer to Question 5:

Copote Parsons Total $ $ 84,000 12,000 $ 12,000 $ $ 72,000 (84,000 - 12,100) 15,000 $ 6,000 (60,000 X 10%) $ 9,000 (90,000 X 10%) Net Income Salary allowances Balance after salary allowances Interest allowances Calculation Balance after interest and salary Balance allocated in the ratio of 40% to 60% Calculation Balance of income $ 57,000 (72,000 - 15,000) $ 57,000 $ 22,800 (57,000 X 40%) $ 40,800 (12,000 + 6,000 + 22,800) $ 34,200 (57,000 X 60%) $ 43,200 Calculation (9,000+ 34,200)