Q 12 -Waleed, Haider, and Lateef began a small manufacturing company organized as a partnership. Waleed, Haider, and Lateef have capital balances on January 1 of $80,000, $60,000 and $40,000, respectively. The partnership income-sharing agreement is as follows: (1). Salaries to Waleed and Haider of $30,000 each and a salary to Lateef of $25,000. (2). Interest at 5% on beginning capital balances. (3). Remaining profits are to be allocated equally among the partners. Instructions (a). Prepare a schedule showing the distribution of net income, assuming net income is (1) $100,000 and (2) $85,000. (b). Journalize the allocation of net income in each of the situations above.
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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