Ambiguity LLP has four partners, with equity balances on January 1, 2015, as follows: Von Porter .............................

Question:

Ambiguity LLP has four partners, with equity balances on January 1, 2015, as follows:
Von Porter ............................. $68,500
Elisse Rand ............................ 75,000
Ming Foo .............................. 49,900
David Estevan ........................ 35,460
Rand contributed an additional $50,000 to Ambiguity LLP on June 1, 2015. Porter received an annual salary allowance of $85,600 during 2015. The partners' equity accounts are also credited with 5% interest on each partner's January 1 capital balance. Any remaining income is to be shared in a ratio of 4:3:2:1 among the partners. The net income for Ambiguity LLP for 2015 was $544,433. The salary and interest allowances were distributed to the partners during the year.
Instructions
1. Determine the division of income among the four partners.
2. Prepare the journal entries to close the net income and withdrawals to the individual partner equity accounts.
3. Prepare a statement of changes in equity for 2015.
4. Identify the amount of income that Von Porter will report on his 2015 personal tax return. Why might this amount be different from the amount of cash he withdrew from the during 2015?
Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...