Question

Calculator Rodgers and Winter had capital balances of $60,000 and $90,000, respectively, at the beginning of the current fiscal year. The articles of partnership provide for salary allowances of $25,000 and $30,000, respectively; an allowance of interest at 12% on the capital balances at the beginning of the year; and the remaining net income divided equally. Net income for the current year was $110,000. a. Present the Division of net income section of the income statement for the current year. Net income $110,000 Rodgers Winter Total Division of net income: Salary allowance Interest allowance Total Net Income b. Assuming that the net income had been $65.000 instead of $110.000, present the Division of net income section of the income statement for the current year Net income $65,000

Answer 1

Solution a:

Schedule of Divison of income
Particulars	Rodgers	Winter	Total
Salary Allowance	$25,000.00	$30,000.00	$55,000.00
Interest Allowance	$7,200.00	$10,800.00	$18,000.00
Remaining income (1:1)	$18,500.00	$18,500.00	$37,000.00
Net Income	$50,700.00	$59,300.00	$110,000.00

Solution b:

Schedule of Divison of income
Particulars	Rodgers	Winter	Total
Salary Allowance	$25,000.00	$30,000.00	$55,000.00
Interest Allowance	$7,200.00	$10,800.00	$18,000.00
Remaining income (1:1)	-$4,000.00	-$4,000.00	-$8,000.00
Net Income	$28,200.00	$36,800.00	$65,000.00