Ben Conway, Ida Chan, and Clair Scott formed CCS Consulting this year by making capital contributions of
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Question:
Ben Conway, Ida Chan, and Clair Scott formed CCS Consulting this year by making capital contributions of $262,000, $298,000, and $192,000, respectively. They anticipate annual profit of $451,200 and are considering the following alternative plans of sharing profits and losses:
- Equally;
- In the ratio of their initial investments; or
- Salary allowances of $119,000 to Conway, $94,000 to Chan, and $69,000 to Scott and interest allowances of 12% on intial investments, with any remaining balance shared equally.
Required:
1. Use the schedule to show how a profit of $451,200 would be distributed under each of the alternative plans being considered.
Related Book For
Fundamental Accounting Principles Volume II
ISBN: 978-1260305838
16th Canadian edition
Authors: Kermit Larson, Tilly Jensen, Heidi Dieckmann
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