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.
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