Maurice Tutor

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    Argosy University/ Phoniex University/
    Nov-2005 - Oct-2011

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    Phoniex University
    Oct-2001 - Nov-2016

Category > Accounting Posted 22 Jul 2017 My Price 11.00

Will Beck, Ron Beck

Will Beck, Ron Beck, and Barb Beck formed the BBB Partnership by making capital contributions of $183,750, $131,250, and $210,000, respectively. They predict annual partnership net income of $225,000 and are considering the following alternative plans of sharing income and loss:

(a) equally;

(b) in the ratio of their initial capital investments; or

(c) salary allowances of $40,000 to Will, $30,000 to Ron, and $45,000 to Barb; interest allowances of 10% on their initial capital investments; and the balance shared equally.

Required

1. Prepare a table with the following column headings.

Income (Loss)

        

Sharing Plan

Calculations

Will

Ron

Barb

Total
           
           
           

Use the table to show how to distribute net income of $225,000 for the calendar year under each of the alternative plans being considered. (Round answers to the nearest whole dollar.)

2. Prepare a statement of partners’ equity showing the allocation of income to the partners assuming they agree to use plan (c), that income earned is $104,500, and that Will, Ron, and Barb withdraw $17,000, $24,000, and $32,000, respectively, at year-end.

3. Prepare the December 31 journal entry to close Income Summary assuming they agree to use plan (c) and that net income is $104,500. Also close the withdrawals accounts.

Answers

Maurice Tutor
(5)
Status NEW Posted 22 Jul 2017 10:07 PM My Price 11.00

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