Question

Batman, Spiderman and Mr. Freeze are partners in the accounting firm of BSF-CPA They share profits and losses as follows: Spiderman Batman Mr. Freeze Partners receive 12% interest on their beginning of the year capital balance Mr. Freeze receives a $30,000 salary while Batman and Spiderman each receive $40,000 salaries All 3 take their salary in cash. In addition, Mr. Freeze takes $1000 out of the partnership each month to pay for his tanning-salon membership. At the beginning of 2017 they had the following capital balances; Batman Spiderman Mr. Freeze $100,000 $400,000 500,000 In 2017 BSF had revenue of $250,000 In 2018 BSF had revenue of $100,000 In 2019 BSF had revenue of $300,000 REQUIRED: A) DETERMINE THE DISTRIBUTION OF INCOME TO EACH PARTNER IN 2017, 2018 AND 2019 B) DETERMINE THE ENDING CAPITAL BALANCE OF EACH PARTNER AT THE END OF 2017, 2018 AND 2019

Answer 1

Capital Valuation 2017 Profit Calculation Capital | Interet @12% on Beginning of Capital Bal ance Profit or Loss (5040:1 Oin Less Capital Balance at the Salary 2017order) Drawings End of 2017 Partners 2017 2017 2018 100000 14856015912 110000 11 Year 2017 2019 Batman Spiderman Mr. Freéze Revenue Less Interest Paid Less Salary Payment Made Net Profit for 2017 162 25 12 Total 120000 110000 20000 12000 1238000 20000 158560 30880 Capital Valuation 2018 Profit or Loss Capital | Interet @12% on Beginning of Capital Balance (50:40:10 i ss: Capital Balance at the Partners order End of 2018 2017 16 2018 19440 59520 69600 148560 Salary 2017 Drawings 792 Batman Spiderman Mr. Freeze 14216 532 65174 -63424 158 Total 1238000 110000 158560 12000 1326000 Capital Valuation 2019 Capital | Interet @12% on Beginning of Capital Bal ance Profit or Loss (50:40:10 in Less Capital Bal ance at the Partněrs 2017 Salary 2017 order) End of 2019 2019 17059.2 63851.52 78209.28 159120 Drawines Batman Spiderman Mr. Freeze 1421 53 651744 12352 3088 214659. 648299.5 751041.2 Total 1326000 110000 30880 12000 1614000

1. Assumed that Salary paid each year 30,000 to Mr.Breeze and 40,000 each to Spiderman and Batman respectively.