Problem #2 Erica, Deana & Tara had average capital balances of $350,000,$380,000 and $400,000 respectively during the
Question:
Problem #2\ Erica, Deana & Tara had average capital balances of
$350,000,$380,000
and
$400,000
respectively during the current fiscal year. The partnership agreement provides for an allowance of
4%
on the average capital balances and salary allowances of
$85,000
for Erica,
$60,000
for Deana and
$55,000
for Tara. Any remaining amount or deficit is to be allocated in a ratio of 2:3:4 for Erica, Deana & Tara respectively.\ Instructions:\ {a} Assuming net income for the year was
$281,200
prepare a schedule indicating the specific elements which make up the division of net income amongst the partners\ {b} Prepare the appropriate closing entry to reflect the division of income from part
{a}
{c} Assuming net income for the year was
$222,700
prepare a schedule indicating the specific elements which make up the division of net income amongst the partners\ Problem #3\ Karen and Larissa sharing net income in a ratio of 5:3 agree to admit Julie to the partnership. Prior to the admission of Julie, Karen and Larissa had the following capital balances:\ \\\\table[[Karen,,
$
,570,000],[Lariss:a,,
$
,630,000]]\ Instructioris:\ {a}\ \\\\table[[Assuming Julie agreed to contribute,
$,300,000
,for a,
18.00%
Financial Reporting and Analysis Using Financial Accounting Information
ISBN: 978-1439080603
12th Edition
Authors: Charles H Gibson