Part 1
Interest allowance to Prince = Prince Capital x Interest rate
= 87,000 x 7%
= $6,090
Interest allowance to Poodle = Poodle capital x Interest rate
= 111,000 x 7%
= $7,770
Total income = $273,000
Total of salary allowance and interest allowance = $158,340
Remaining income = Total income- Total of salary allowance and interest allowance
= 273,000-158,340
= $114,660
Prince share of remaining income = Remaining income x 1/3
= 114,660 x 1/3
= $38,220
Poodle share of remaining income = Remaining income x 2/3
= 114,660 x 2/3
= $76,440
Steve Prince | Chelsy Poodle | Total | |
Salary allowance | 0 | 158,340 | 158,340 |
Interest allowance | 6,090 | 7,770 | 13,860 |
Total | 6,090 | 166,110 | 172,200 |
Remaining income | 33,600 | 67,200 | 100,800 |
Total | 39,690 | 233,310 | 273,000 |
Prince | $39,690 |
Poodle | $233,310 |
Part 2
a,
General Journal | Debit | Credit |
Equipment | 72,000 | |
Kevin Camden, Capital | 24,000 | |
Chloe Sayler, Capital | 48,000 |
Book value of equipment = $249,000
Market value of equipment = $321,000
revaluation gain = Market value of equipment- Book value of equipment
= 321,000-249,000
= $72,000
Revaluation gain transferred to Kevin Camden = 72,000 x 1/3
= $24,000
Revaluation gain transferred to Chloe Sayler = 72,000 x 2/3
= $48,000
b.
General Journal | Debit | Credit |
Cash | 50,000 | |
Demarco Lee, Capital | 50,000 |
Kindly comment if you need further assistance.
Thanks‼!
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