On October 1, 2018, Andy, Brian, and Caden formed the A, B, and C partnership. Andy contributed $27,300; Brian, $45,500; and Caden, $57,200. Andy will manage the store; Brian will work in the store three-quarters of the time; and Caden will not work in the business.
Requirements
1. Compute the partners' shares of profits and losses under each of the following plans:
a. Net loss for the year ended September 30, 2019, is $45,000, and the partnership agreement allocates 60% of profits to Andy, 30% to Brian, and 10% to Caden. The agreement does not discuss sharing of losses.
b. Net income for the year ended September 30, 2019, is $93,000. The first $30,000 is allocated on the basis of relative partner capital balances. The next $24,000 is based on service, with $14,000 going to Andy and $10,000 going to Brian. Any remainder is shared equally.
2. Using plan b, prepare the partnership statement of partners' equity for the year ended September 30, 2019. Assume Andy, Brian, and Caden each withdrew $13,000 from the partnership during the year?