Question

Required information Use the following information for the Exercises below. [The following information applies to the questions displayed below.) Ramer and Knox began a partnership by investing $80,000 and $120,000, respectively. Exercise 12-5 Part 3 Income allocation in a partnership LO P2 3. The partners agreed to share income by giving a $65,000 per year salary allowance to Ramer, a $47,000 per year salary allowance to Knox, 10% interest on their initial capital investments, and the remaining balance shared equally. Net income is $235,000. (Enter all allowances as positive values. Enter losses as negative values.) Ramer Knox Total Net Income Salary allowances Interest allowances Total salary and interest Balance of income Balance allocated equally Balance of income Shares of the partners

Answer 1

	Interest allowance to Ramer	$8,000	(80000*10%)
	Interest allowance to Knox	$12,000	(120000*10%)
		Ramer	Knox	Total
	Net Income			$235,000
	Salary allowaces	$65,000	$47,000	$112,000
	Interest allowances	$8,000	$12,000	$20,000
	Total Salary and interest	$73,000	$59,000	$132,000
	Balance of income			$103,000	(235000-132000)
	Balance allocated equally	$51,500	$51,500
	Balance of income			$103,000
	Share of the partners	$51,500	$51,500