$16-7$

CHALLENGE PROBLEM

Preparing financial statements $($unequal distribution of net income; additional investment$)$

Central Electronics' work sheet is shown in Mastery Problem $16-6.$ Assume the facts given here for distribution of net income. Forms for completing this problem are given in the Working Papers.

Instructions:

Prepare a distribution of net income statement. The net income is to be shared as follows: Irene Greer, $8\%$ of January $1$ capital, $$15,000\mathrm{.}00$ salary, $60\%$ of remainder; Gayle Stewart, $8\%$ of January $1$ capital, $$12,000\mathrm{.}00$ salary, $40\%$ of remainder. Ms$.$ Stewart mode an additional investment during the year. Her January $1$ capital was $$139,990\mathrm{.}00.$

Prepare an owners' equity statement. Ms$.$ Stewart made an additional investment of $$18,000\mathrm{.}00$ during the year. She had January $1$ capital of $$139,990\mathrm{.}00.$