On October 1, 2018, Art, Bryce, and Chad formed the A, B, and C partnership. Art contributed $20,000; Bryce, $32,000; and Chad, $48,000. Art will manage the store; Bryce will work in the store three-quarters of the time; and Chad will not work in the business.
Requirements
1. Compute the partners' shares of profits and losses under each of the following plans:
a. Net loss for the year ended September 30, 2019, is $45,000, and the partnership agreement allocates 50% of profits to Art, 40% to Bryce, and 10% to Chad. The agreement does not discuss sharing of losses.
b. Net income for the year ended September 30, 2019, is $98,000. The first $35,000 is allocated on the basis of relative partner capital balances. The next $27,000 is based on services, with $17,000 going to Art and $10,000 going to Bryce. Any remainder is shared equally.
2. Using plan b, prepare the partnership statement of partners' equity for the year ended September 30, 2019. Assume Art, Bryce, and Chad each withdrew $6,000 from the partnership during the year?