On October 1, 2014, Elliot, Ford, and Grant formed the E, F, and G partnership.
Elliot contributed $24,000; Ford, $34,000; and Grant, $42,000. Elliot will manage the
store; Ford will work in the store three-quarters of the time; and Grant will not work.
1. Compute the partners' shares of profits and losses under each of the following plans:
a. Net loss for the year ended September 30, 2013 is $47,000, and the partner­ship agreement allocates 45% of profits to Elliot, 35% to Ford, and 20% to Grant. The agreement does not discuss sharing of losses.
b. Net income for the year ended September 30, 2015, is $99,000. The first $30,000 is allocated on the basis of relative partner capital balances. The next $39,000 is based on service, with $29,000 going to Elliot and $10,000 going to Ford. Any remainder is shared equally.
2. Using plan (b), prepare the partnership statement of partners' equity. Assume Elliot, Ford, and Grant each withdrew $8,000 from the partnership during the year.