The income statement for the Apple-Jack Partnership for the year ended December 31, 20X5, appears below:

1. Apple began the year with a capital balance of \(\$ 40,800\).
2. Jack began the year with a capital balance of \(\$ 112,000\).
3. On April 1, Apple invested an additional \(\$ 15,000\) into the partnership.
4. On August 1, Jack invested an additional \(\$ 20,000\) into the partnership.
5. Throughout \(20 \times 5\), each partner withdrew \(\$ 400\) per week in anticipation of partnership net income. The partners agreed that these withdrawals are not to be included in the computation of average capital balances for purposes of income distributions.
Apple and Jack have agreed to distribute partnership net income according to the following plan:

Required

a. Prepare a schedule which discloses the distribution of partnership net income for 20X5. Show supporting computations in good form. Round to the nearest dollar.

b. Prepare the statement of partners' capital at December 31, 20X5.

c. How would your answer to Required part a change if all of the provisions of the income distribution plan were the same except that the salaries were \(\$ 30,000\) to Apple and \(\$ 35,000\) to Jack?

Transcribed Image Text:

Apple-Jack Partnership Income Statement For the Year Ended December 31, 20X5 Net Sales Cost of Goods Sold Gross Margin Operating Expenses Net Income $300,000 (190.000) $110,000 (30,000) $ 80.000