Question

Income Statement For the Year Ended December 31, 20X5 Net Sales S300,000 Cost of Goods Sold (190,000) Gross Margin 110,000 Operating Expenses (30,000) Net Income S 80,000 Additional Information for 20x5 1. Apple began the year with a capital balance of $40,800 2. Jack began the year with a capital balance of S112,000 3. On April 1, Apple invested an additional $15,000 into the partnership 4. On August 1, Jack invested an additional $20,000 into the partnership 5. Throughout 20x5, each partner withdrew $400 per week in anticipation of partnership net income. The partners agreed that these withdrawals are not to be included in the computation of average capital balances for purposes of income distributions Apple and Jack have agreed to distribute partnership net income according to the following plan Apple Jack 1. Interest on average capital balances 6% 5% 2. Bonus on net income before the bonus but after interest on average capital balances 10% 3. Salaries $25,000 $30,000 4. Residual (if positive) 7096| 3096 Residual (if negative) 50% 50%
Advanced Financial Accounting (9th Edition) Chapter 15, Problem 4EXA
I can't figure out where Net Income Distribution numbers came from. I don't see why it wouldn't be 50-50%

Answer 1

Net Income Distrbution Apple Jack Total Avg Capital Apple Balance Jan 1 20XS Additional investment Total Interest at 6% (A) Salaries (B) Bonus (10% of profit) after Interest © Distribute Balance profit In 7:3 Ratio (D Total of (A+B+C+D) 40,800 112,000 152,800 20,000 55,800 132,000 187,800 Jack 15,000 35,000 Balance Jan 1 20X5 Additional Investment Interest 40,800 112,000 8,333 7220 11,250 3123 152,800 19,583 3,123 25,000 6,966 5,384 40,473 7,220 10,343 55,000 6,966 7,691 80,000 30,000 Balance profit available 2,307 39,527 Net profit Interest Salary Bonus 80,000 10,343 55,000 6,966 7,691 Less