Question 2 chapter 12 Handout Assignment
Joanne and Diane have a partnership in The Luxury Flooring Company. The partnership agreement includes the following provisions regarding sharing profit or loss:
A salary allowance of $ 90,000 to Joanne and $ 65,000 to Diane.
An interest allowance of 7% on capital balances at the beginning of the year.
The remainder to be divided 60% to Joanne and 40% to Diane.
The capital balances on January 1, 2021, for Joanne and Diane were $480,000 and $1,000,000, respectively. During 2021, The Luxury Flooring Company had sales of $1,200,000, cost of goods sold of $417,000, and operating expenses of $335,000.
Instructions:
Prepare an income statement for The Luxury Flooring Company for the year ended December 31, 2021. As a part of the income statement, include a division of profit to each of the partners.
Homework Answers
| The Luxury Flooring Company | ||
| for the year ended December 31, 2021 | ||
| Particular | Amount ($) | |
| Sales | 1200000 | |
| Cost of Goods Sold | 417000 | |
| Gross Profit | 783000 | |
| Operating Expenses | 335000 | |
| Net Income for appropriation | 448000 | |
| Salary- Joanne | 90000 | |
| - Daine | 65000 | 155000 |
| Interest -Joanne | 33600 | |
| - daine | 70000 | 103600 |
| Residual net income for distribution | 189400 | |
| Joanne's share | 113640 | |
| Daine's share | 75760 |
P12.4B Exercise
P12.4B (LO 3, 4) AP Terry Lam and Chris Tan have a partnership agreement with the following provisions for sharing profit or loss:Calculate division of profit or loss. Prepare statement of partners' equity and closing entries.A salary allowance of $20,000 to Lam and $30,000 to TanAn interest allowance of 5% on capital balances at the beginning of the yearThe remainder to be divided between Lam and Tan on a 3:4 basisThe capital balances on February 1, 2020, for T. Lam and C. Tan were...
Question 1 chapter 12 Handout Assignment
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plus a salary allowance of $ 85 per hour worked. Any remaining profit or loss after...
Activation Exercise 12-2: Dividing Partnership Net Income by Services of Partners Terms and Definitions The income...
Activation Exercise 12-2: Dividing Partnership Net Income by Services of Partners Terms and Definitions The income of a partnership is divided among the partners each period. The income or losses of the partnership are divided as specified in the partnership agreement . If there is no agreement, income and losses are divided equally . Feedback Check My Work Most partnerships specify how income or losses are to be divided. Income or losses of a partnership are divided equally if no...
Exercise 12-5 Coburn (beginning capital, $60,000) and Webb (beginning capital $90,000) are partners. During 2017, the...
Exercise 12-5 Coburn (beginning capital, $60,000) and Webb (beginning capital $90,000) are partners. During 2017, the partnership earned net income of $80,000, and Coburn made drawings of $18,000 while Webb made drawings of $24,000. Assume the partnership income-sharing agreement calls for income to be divided 45% to Coburn and 55% to Webb, prepare the journal entry to record the allocation of net income. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and...
Exercise 12-05 a-d Coburn (beginning capital, $58,000) and Webb (beginning capital $84,000) are partners. During 2020,...
Exercise 12-05 a-d Coburn (beginning capital, $58,000) and Webb (beginning capital $84,000) are partners. During 2020, the partnership earned net income of $71,000, and Coburn made drawings of $18,000 while Webb made drawings of $20,000. Assume the partnership income-sharing agreement calls for income to be divided 35% to Coburn and 65% to Webb. Prepare the journal entry to record the allocation of net income. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles...
Question 1: (6 marks) David (beginning capital, $60,000) and Gerald (beginning capital $90,000) are partners. During...
Question 1: (6 marks) David (beginning capital, $60,000) and Gerald (beginning capital $90,000) are partners. During 2020, the partnership earned net income of $80,000, and David made drawings of $18,000 while Gerald made drawings of $24,000. Instructions a. Assume the partnership income-sharing agreement calls for income to be divided with a salary of $30,000 to David and $25,000 to Gerald, with the remainder divided 45% to David and 55% to Gerald. Prepare the journal entry to record the allocation of...
Dividing Partnership Income Tyler Hawes and Piper Albright formed a partnership, Investing $195,000 and $65,000, respectively....
Dividing Partnership Income Tyler Hawes and Piper Albright formed a partnership, Investing $195,000 and $65,000, respectively. Determine their participation in the year's net income of $300,000 under each of the following independent assumptions: a. No agreement concerning division of net income. b. Divided in the ratio of original capital investment. C. Interest at the rate of 5% allowed on original investments and the remainder divided in the ratio of 2:3. d. Salary allowances of $36,000 and $47,000, respectively, and the...
5) Copote and Parsons formed a partnership with capital contributions of $60,000 and $90,000 respectively. Their...
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...
Gray, Stone, and Lawson open an accounting practice on January 1, 2016, in San Diego, California,...
Gray, Stone, and Lawson open an accounting practice on January
1, 2016, in San Diego, California, to be operated as a partnership.
Gray and Stone will serve as the senior partners because of their
years of experience. To establish the business, Gray, Stone, and
Lawson contribute cash and other properties valued at $420,000,
$390,000, and $195,000, respectively. An articles of partnership
agreement is drawn up. It has the following stipulations:
Personal drawings are allowed annually up to an amount equal...
68. Which of the following statements is false? Partners may contribute additional capital to the partnership...
68. Which of the following statements is false? Partners may contribute additional capital to the partnership in the form of cash and other assets Withdrawals of cash by the partners are called "drawings." The partnership income statement includes revenues and expenses but not salary paid to partners A) B) C) D) All of the above are true 69. Which of the following statements about the allocation of partnership profit or loss is false? A) Partnership agreements sometimes allow for a...
Activation Exercise 12-2: Dividing Partnership Net Income by Services of Partners Terms and Definitions The income of a partnership is divided among the partners each period. The income or losses of the partnership are divided as specified in the partnership agreement . If there is no agreement, income and losses are divided equally . Feedback Check My Work Most partnerships specify how income or losses are to be divided. Income or losses of a partnership are divided equally if no...
Exercise 12-5 Coburn (beginning capital, $60,000) and Webb (beginning capital $90,000) are partners. During 2017, the partnership earned net income of $80,000, and Coburn made drawings of $18,000 while Webb made drawings of $24,000. Assume the partnership income-sharing agreement calls for income to be divided 45% to Coburn and 55% to Webb, prepare the journal entry to record the allocation of net income. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and...
Exercise 12-05 a-d Coburn (beginning capital, $58,000) and Webb (beginning capital $84,000) are partners. During 2020, the partnership earned net income of $71,000, and Coburn made drawings of $18,000 while Webb made drawings of $20,000. Assume the partnership income-sharing agreement calls for income to be divided 35% to Coburn and 65% to Webb. Prepare the journal entry to record the allocation of net income. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles...
Question 1: (6 marks) David (beginning capital, $60,000) and Gerald (beginning capital $90,000) are partners. During 2020, the partnership earned net income of $80,000, and David made drawings of $18,000 while Gerald made drawings of $24,000. Instructions a. Assume the partnership income-sharing agreement calls for income to be divided with a salary of $30,000 to David and $25,000 to Gerald, with the remainder divided 45% to David and 55% to Gerald. Prepare the journal entry to record the allocation of...
Dividing Partnership Income Tyler Hawes and Piper Albright formed a partnership, Investing $195,000 and $65,000, respectively. Determine their participation in the year's net income of $300,000 under each of the following independent assumptions: a. No agreement concerning division of net income. b. Divided in the ratio of original capital investment. C. Interest at the rate of 5% allowed on original investments and the remainder divided in the ratio of 2:3. d. Salary allowances of $36,000 and $47,000, respectively, and the...
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...
Gray, Stone, and Lawson open an accounting practice on January
1, 2016, in San Diego, California, to be operated as a partnership.
Gray and Stone will serve as the senior partners because of their
years of experience. To establish the business, Gray, Stone, and
Lawson contribute cash and other properties valued at $420,000,
$390,000, and $195,000, respectively. An articles of partnership
agreement is drawn up. It has the following stipulations:
Personal drawings are allowed annually up to an amount equal...
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