A, B and C formed a partnership on January 1, 2007 with investments of $200,000, $300,000 and $400,000 respectively. The profit and loss sharing ratio is 20% for A, 30% for B and 50% for C. For division of income, they have agreed: 1. interest of 10% of beginning capital balance each year 2. annual compensation of $10,000 for B. The partnership earns $500,000 in its first year of operation. Each partner draws $1000 a month. What is B’s share of the net income What is C’s capital balance at the end of the first year
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
8 A, B and C formed a
1. interest of 10% of beginning capital balance each year
2. annual compensation of $10,000 for B.
The partnership earns $500,000 in its first year of operation. Each partner draws $1000 a month.
What is B’s share of the net income
What is C’s capital balance at the end of the first year
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