Question

Exercise 12-6 Income allocation in a partnership LO P2 Ramer and Knox began a partnership by investing $78,000 and $108,000, respectively. The partners agreed to share net income and loss by giving annual salary allowances of $59,000 to Ramer and $47,200 to Knox, 10% interest allowances on their investments, and any remaining balance shared equally. (Enter all allowances as positive values. Enter losses as negative values.) Required: 1. Determine each partner's share given a first-year net income of $116.800. 2. Determine each partner's share given a first-year net loss of $34,800. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine each partner's share given a first-year net income of $116,800. Total 116,800 $ Allocation of Partnership Income Ramer Knox Net Income (loss) Salary allowances Balance of income (loss) Interest allowances Balance of income (loss) Balance allocated equally Balance of income (loss) Shares of the partners

Answer 1

Allocation of fartnership Ramer income I knox Total $116,800 Net Income (los) Salary allowances Balance of income (loss). Interest allowances Balance of income Lloss) Balance allocated equally Balance of income Cross) Shares of the partners $59,000 $47,200 $ 106,200 & 10,600 $7,000 $10,800 $ 18,600 $ (8,000) $(1,000) $(1,000) $ (8,000) $ 62,800 $54,000 Calculation: Interest Allowances a Investment & Rate Kamer: Interest Allowances = $78,000 X 10% = $ 7,800 Knox : Interest Allowances = $ 108,000 x 10% - $ 19,800 Balance allocated equally = (Net Income (Loss) - Salary Allowances - Interest Allowances) : 2] $116,800 - $106, 200 - $18,600)+27 = $(8,000) = 2 = $(4,000)

Total $(34,800)/ - Allocation of partnership income I Ramer Knox Net Income (loss) Salary allowances $59,000 $47,200 $ 106,200 Balance of income Lloss) $(141,000) Interest Allowances $7,000 $10,800 $ 18, 600 Balance of income (loss) $159,600) ance allocated equally $(79,800) $(79,800) $ (159,600) Balance of income Lloss) shares of the partners $(13,000) $ (21,800) Calculation: Interest Allowances = Investment & Rate Ramer: Interest Allowances = $78,000 X 10% $7,800 knox: Interest Allowances = $100,000 x 10% = $10,800 Salary Balance allocated equally = [(met Income (Loss) - Allowances - Interest Allowances): 27 Balance allocated equally = { $(34,800) - $106, 200 - $18,600] =2 - $159,600) + 2 $(79,800)