Question

McGill and Smyth have capital balances on January 1 of $50,000 and $40,000, respectively. The partnership income-sharing agreement provides for (1) annual salaries of $22,000 for McGill and $13,000 for Smyth, (2) interest at 10% on beginning capital balances, and (3) remaining income or loss to be shared 60% by McGill and 40% by Smyth.

Instructions
(a) Prepare a schedule showing the distribution of net income, assuming net income is
(1) $50,000
(2) $36,000.
(b) Journalize the allocation of net income in each of the situations above.



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  • CreatedJanuary 30, 2014
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