Evans and Downing operate a legal practice as partners. On 31 March 2022 Evans and Downing admitted
Question:
Evans and Downing operate a legal practice as partners. On 31 March 2022 Evans and Downing admitted a new partner, Smith, into the partnership. The terms of the agreement provided that the profits of the partnership would be shared equally after the salary paid to each partner. Salary paid to each partner was agreed at $80,000 per annum.
On 31 March 2022, the net income of the partnership per S90 ITAA1936 is $266,000 and for the three subsequent months to 30 June 2022, the net income of the partnership is $90,000.
REQUIRE:
(i) What is each partner's share of the net income of the partnership? Please show all workings.
(ii) Because of a shortage of working capital, Evans made a loan of $50,000 to the partnership on 1 May 2022 and the interest totaled $280 for the two months to 30 June 2022. How does this affect your answer to (i) Please show all workings?
Principles of Accounting
ISBN: 978-1133626985
12th edition
Authors: Belverd E. Needles, Marian Powers and Susan V. Crosson