On 1 July 2015, Edwards, French and Gill formed the E, F and G partnership. Edwards invested $21 000, French $35000 and Gill $44000. Edwards will manage the store, French will work in the store three-quarters of the time, and Gill won't work in the business. Requirements 1 Calculate the partners' shares of profits and losses under each of the following plans: a Loss for the year ended 30 June 2016 is $42000 and the partnership agreement allocates 45% of profits to Edwards, 35% to French and 20% to Gill. The agreement doesn't discuss the sharing of losses. b Profit for the year ended 30 June 2016 is $97000. The first $25000 is allocated on the basis of relative partner capital balances. The next $48 000 is based on service, with $38000 going to Edwards and $10000 going to French. Any remainder is shared equally. 2 Revenues for the year ended 30 June 2016 were $209 000 and expenses were $112 000. Using plan b above, prepare the partnership income statement for the year (and showing each partner's share of the profit or loss for the 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.
![P13-4 Allocating profits and losses to the partners, preparing partnership financial
statements [25-35 min]
On 1 July 2015, Edwards, French and Gill formed the E, F and G partnership. Edwards invested
$21 000, French $35000 and Gill $44000. Edwards will manage the store, French will work in
the store three-quarters of the time, and Gill won't work in the business.
Requirements
1 Calculate the partners' shares of profits and losses under each of the following plans:
a Loss for the year ended 30 June 2016 is $42000 and the partnership agreement
allocates 45% of profits to Edwards, 35% to French and 20% to Gill. The agreement
doesn't discuss the sharing of losses.
b Profit for the year ended 30 June 2016 is $97000. The first $25000 is allocated on
the basis of relative partner capital balances. The next $48000 is based on service,
with $38000 going to Edwards and $10000 going to French. Any remainder is shared
equally.
2 Revenues for the year ended 30 June 2016 were $209000 and expenses were $112000.
Using plan b above, prepare the partnership income statement for the year (and showing
each partner's share of the profit or loss for the year).](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9d6686f0-24e3-43de-bc21-a827730605bb%2F9fdf9e5f-5bcb-46a1-b2a5-19a743f0150f%2Ftgo6gx_processed.png&w=3840&q=75)
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