Allocation of Interest on Capital Accounts and Profit to Partners Assume that there are three...
Allocation of Interest on Capital Accounts and Profit to Partners
Assume that there are three partners in a partnership, A, B, and C. Partners A and B each began the year with a capital account of $900,000. Partner C was admitted to the partnership during the year with a capital contribution of $630,000. The Partnership Agreement provides for a salary to Partner C of $90,000 and interest on the respective Capital Accounts of $45,000/$45,000/$23,625, respectively. During the year, the partners withdrew $36,000/$36,000/$21,000 and the allocation of profit was $207,900/$207,900/$121,275, respectively.
Prepare the Statement of Partners’ Capital for the year.
Homework Answers
| All Amounts in $ | |||||
| A | B | C | Total | ||
| Statement of Partners' Capital | |||||
| Capital account, beginning of year-A | $900,000 | $900,000 | $1,800,000 | ||
| Capital contributions-B | $630,000 | $630,000 | |||
| Withdrawals-C | ($36,000) | ($36,000) | ($21,000) | ($93,000) | |
| Salary-D | $90,000 | $90,000 | |||
| Interest-E | $45,000 | $45,000 | $23,625 | $113,625 | |
| Allocation of remaining profit-F | $207,900 | $207,900 | $121,275 | $537,075 | |
| Closing Balance in Capital Account-A+B+C+D+E+F | $1,116,900 | $1,116,900 | $843,900 | $3,077,700 |
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Allocation of Interest on Capital Accounts and Profit to
Partners
Assume
that there are three...
Assume that there are three partners in a partnership, A, B, and C. Partners A and...
Assume that there are three partners in a partnership, A, B, and C. Partners A and B each began the year with a capital account of $900,000. Partner C was admitted to the partnership during the year with a capital contribution of $630,000. The Partnership Agreement provides for a salary to Partner C of $90,000 and interest on the respective Capital Accounts of $45,000/$45,000/$23,625, respectively. During the year, the partners withdrew $36,000/$36,000/$21,000 and the allocation of profit was $207,900/$207,900/$121,275, respectively...
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