Sharp and Townson had capital balances of $60,000 and $90,000 respectively at the beginning of the current fiscal year The articles of partnership provide for salary allowances of $25,000 and $30,000 respectively, an allowance of interest at 12 on the capital balances at the beginning of the year, ...

Total Net Income Sharp OBal 60000 Salary 25000 Int 12 7200 Remaining Income ...

Sharp and Townson had capital balances of $60,000 and $90,000 respectively at the beginning of the current

Question:

Sharp and Townson had capital balances of $60,000 and $90,000 respectively at the beginning of the current fiscal year. The articles of provide for salary allowances of $25,000 and $30,000 respectively, an allowance of interest at 12% on the capital balances at the beginning of the year, with the remaining net income divided equally. Net income for the current year was $100,000.
(a) Present the income division section of the income statement for the current year.
(b) Assuming that the net income had been $50,000 instead of $100,000, present the income division section of the income statement for the current year.
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...