The 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 partner’s capital account. Tatum’s capital account balance is \$50,000 and Brook’s is \$60,000.

FindFindarrow_forward

Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685

Solutions

Chapter
Section
FindFindarrow_forward

Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
Chapter 15, Problem 1PA
Textbook Problem
1 views

The 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. \$40,000B. \$25,000C. (\$5,000)In addition, show the resulting entries to each partner’s capital account. Tatum’s capital account balance is \$50,000 and Brook’s is \$60,000.

To determine

Concept introduction:

Journal Entry: It helps company or any business to record the transaction in double entry system. Every transaction has two effects; one is debit and another is credit.

Partnership: Two or more persons start a business in which they share profit or loss in agreed ratio and work on behalf of each other.

To calculate:

Schedule of distribution of partners profit or loss.

Explanation of Solution

 Schedule Showing distribution of profit Particulars Case 1 Case 2 Case 3 Profit or Loss 40000 25000 -5000 Less: Salary of Both Partner 25000 25000 25000 Total Profit 15000 0 -30000 Profit of 1st partner 9000 0 -18000 Profit of 2nd partner 6000 0 -12000

Above profit are distributed in partners in ratio 60:40. In schedule, first firm calculates the net profit then distributes it in the above ratio.

Salary of partner= 10000+ 15000= 25000

Case 1

 Partner's Capital Account Particulars Tatum Brook Particulars Tatum Brook By Bal B/d 50000 60000 By Profit & Loss 9000 6000 By Salary 10000 15000 To Bal c/d 69000 81000 69000 81000 69000 81000 Case 2

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Find more solutions based on key concepts