McGill and Smyth have capital balances on January 1 of $53,000 and $34,000, respectively. The partnership income-sharing agreement provides for (1) annual salaries of $16,000 for McGill and $17,000 for Smyth, (2) interest at 10% on beginning capital balances, and (3) remaining income or loss to be shared 70% by McGill and 30% by Smyth. (a) (1) Prepare a schedule showing the distribution of net income, assuming net income is $66,000. (If an amount reduces the account balance then enter with a negative sign preceding the number or parenthesis, e.g.-15,000, (15,000).)
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.
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