Concept explainers
Allocation of
Interest on capital balances: the interest on capital is credited to partners’ capital balances as part of profit distribution. In this situation, average capital balance is determined based on which interest is calculated. The rate of interest is often stated in partnership agreement, but some time partnerships use a rate determined by reference to current U.S. Treasury rates or current
The preparation of income distribution schedule when income is $50,000.
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Chapter 15 Solutions
ADVANCED FINANCIAL ACCOUNTING IA
- The partnership of Magda and Sue shares profits and losses in a 50:50 ratio after Mary receives a $7,000 salary and Sue receives a $6,500 salary. Prepare a schedule showing how the profit and loss should be divided, assuming the profit or loss for the year is: A. $10,000 B. $5,000 C. ($12,000) In addition, show the resulting entries to each partners capital account.arrow_forwardThe partnership of Tatum and Brook shares profits and losses in a 60:40 ratio respectively after Tatum receives a 10,000 salary and Brook receives a 15,000 salary. Prepare a schedule showing how the profit and loss should be divided, assuming the profit or loss for the year is: A. $40,000 B. $25,000 C. ($5,000) In addition, show the resulting entries to each partners capital account. Tatums capital account balance is $50,000 and Brooks is $60,000.arrow_forwardDividing Partnership Net Income Required: Steve Conyers and Chelsy Dane formed a partnership, dividing income as follows: Annual salary allowance to Dane of $172,260. Interest of 6% on each partner's capital balance on January 1. Any remaining net income divided to Conyers and Dane, 1:2. Conyers and Dane had $87,000 and $87,000, respectively, in their January 1 capital balances. Net income for the year was $297,000. How much is distributed to Conyers and Dane? Note: Compute partnership share.Conyers: $Dane: $arrow_forward
- College Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
- Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage LearningPrinciples of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
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