Solution
Preeta answered on
Feb 04 2021
E 15-4: Distribution of Partnership Profit/Loss and Determination of Partners’ Ending Capital Balances
Use the information provided in “c” and assume that the entire P/L distribution process must be completed before allocating the residual to the partners. DO NOT round your numbers except for the final answers.
(1) How much is the amount of 20Χ5 income to be distributed to each partner, respectively?
Apple
$ 25,110
Jack
$ 16,740
(2) How much is the 20Χ5 ending capital balances for each partner?
Apple
$
Jack
$ 152,265.65
Show work!
Income of the business = $80,000
Interest = $24,200
Residual = $55,800
Bonus = $ 13,950
Total Profit = $ 41,850
To be shared among Apple and Jack in the ratio of 6:4.
Capital of Apple:
Invested in the beginning = $ 40,000
Additional Investment = $12,000
Capital for interest = $52,000
Interest (@10%) = $5,200
Salary = 30,000
(-) Drawings (400*52) = $20,800
Bonus = $13,950
Ending capital = 80,350
Capital of Jack:
Invested in the beginning = $ 110,000
Additional Investment = $80,000
Capital for interest = $190,000
Interest (@10%) = $19,000
(-) Drawings (400*52) = $20,800
Salary = 35,000
Ending capital = 223,200
Calculation of interest:
Total Capital: Apple = $52,000
Jack = $190,000
Total = $ 242,000
Interest(@10%) = $24,200
Share of interest for each (52:190): Apple = $5,200
Jack = $19,000
25% bonus has been be allotted to Apple after payment of interest from the profit that is 25% on $55,800.
ACCT 411 Chapter 15 Homework (Spring 2020) Name:
P 15-11 : Admission of a New Partner (SHOW WORK!!)
Use the information provided in P15-11 to answer the following revised questions.
a. Wayne directly purchases half of Merina's investment in the partnership from Merina for $90,000. If the bonus method is to be used, “Wayne, capital” account should be credited by:
Ans: Wayne is a new partner in the firm of De
a and Marina. Bonus method for the partnership states that if a new partner admits with high value of intangible asset that is more expertise and knowledge then more capital is provided to the new partner than what he actually paid in cash. In this case, Wayne actually took investment worth...