Dopey, Doc and Grumpy are partners in a successful New York restaurant. At the end of 2015 they had the following capital accounts: Dopey $400,000 Doc: $800,000 Grumpy $100,000 Because of his chef skills, Grumpy receives a salary of $75,000 per year; because of his excellent communication skills, the director of marketing, Dopey receives a salary of $50,000 per year. Partners receive 10% interest on their beginning capital balances. Partners share profits: Dopey 30%; Doc 40%; Grumpy 30%; and they share losses equally. Information for 2016, 2017 and 2018 are as follows:

                             2016                      2017                      2018

Sales                 900,000                  950,000                600,000

Cogs                 300,000                  400,000                500,000

Doc takes out $1000 per month for singing lessons. Both Dopey and Grumpy take their salaries out of the partnership. All 3 partners leave their interest payments in the partnership.

Required:

a) Determine the allocation of income to the partners in 2016, 2017 and 2018.

c) Determine the partnership capital account balances on 12/31/16; 12/31/ 17 and 12/31/18.

Answer rating: 100% (QA)

Answer Dopey Doc and Grumpy All Amounts in Distribution of Profits per year from 2016 to 2018 2016 ... View the full answer