Kimble, Sykes, and Gerard open an accounting practice on Januaryin Chicago, Illinois, to be operated as a partnership. Kimble and Sykes will serve as the senior partners because of their years of experience. To establish the business, Kimble, Sykes, and Gerard contribute cash and other properties valued at $$and $respectively. An articles of partnership agreement is drawn up stipulating the following:

Personal drawings are allowed annually up to an amount equal topercent of the partner\'s beginning capital balance for the year.

Profits and losses are allocated according to the following plan:

Each partner receives an annual salary allowance of $per billable hours worked.

Interest is credited to the partnerscapital accounts at the rate ofpercent of the beginning capital balance for the year.

Kimble and Sykes are eligible for an annual bonus of percent of net income after subtracting the bonus, salary allowance, and interest. The agreement also states that there will be no bonus if there is a net loss or if salary and

interest result in a negative remainder of net income to be distributed. 

 

Any remaining partnership profit or loss is to be divided evenly among all partners.

On Januarythe partners admit Nichols to the partnership. Nichols contributes cash directly to the business in an amount equal to a percent interest in the book value of the partnership property subsequent to this

contribution. The partnership profit and loss sharing agreement is not altered upon Nichols\'s entrance into the firm; the general provisions continue to be applicable. 

 

The billable hours for the partners during the first three years of operation follow:

Kimble

Sykes

Gerard

Nichols

The partnership reports net incomelossforthroughas follows:

$

Each partner withdraws the maximum allowable amount each year.

Required:

Prepare schedules that allocate each year\'s net income to the partners.

Prepare in appropriate form a statement of partnerscapital for the year ending December

Answer rating: 100% (QA)

To allocate the net income to the partners and prepare a statement of partners capital for the year ending December 31 2024 we need to follow the partnership agreement and the allocation rules specifi... View the full answer