Problem

A summary of changes in the capital accounts of the Kat, Lyn, and Mol partnership for 2011...

A summary of changes in the capital accounts of the Kat, Lyn, and Mol partnership for 2011, before closing partnership net income to the capital accounts, is as follows:

 

Kat Capital

Lyn Capital

Mol Capital

Total Capital

Balance January 1, 2011

$80,000

$80,000

$90,000

$250,000

Investment April 1

20,000

 

 

20,000

Withdrawal May 1

 

(15,000)

 

(15,000)

Withdrawal July 1

(10,000)

 

 

(10,000)

Withdrawal September 1

 

 

(30,000)

(30,000)

 

$90,000

$65,000

$60,000

$215,000

REQUIRED: Determine the allocation of the 2011 net income to the partners under each of the following

sets of independent assumptions:

1. Partnership net income is $60,000, and profit is divided on the basis of average capital balances during the year.


2. Partnership net income is $50,000, Kat gets a bonus of 10 percent of income for managing the business, and the remaining profits are divided on the basis of beginning capital balances.


3. Partnership net loss is $35,000, Mol receives a $12,000 salary, each partner is allowed 10 percent interest on beginning capital balances, and the remaining profits are divided equally.

Step-by-Step Solution

Request Professional Solution

Request Solution!

We need at least 10 more requests to produce the solution.

0 / 10 have requested this problem solution

The more requests, the faster the answer.

Request! (Login Required)


All students who have requested the solution will be notified once they are available.
Add your Solution
Textbook Solutions and Answers Search
Solutions For Problems in Chapter 16