Dallas and Weiss formed a partnership to manage rental properties, by investing $144,000 and $216,000, respectively. During

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Dallas and Weiss formed a partnership to manage rental properties, by investing $144,000 and $216,000, respectively. During its first year, the partnership recorded profit of $469,000.


Required

Prepare calculations showing how the profit should be allocated to the partners under each of the following plans for sharing profit and losses:

a. The partners failed to agree on a method of sharing profit.

b. The partners agreed to share profits and losses in proportion to their initial investments.

c. The partners agreed to share profit by allowing a $151,000 per year salary allowance to Dallas, an $81,000 per year salary allowance to Weiss, 20% interest on their initial investments, and sharing the balance equally.

Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...
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Related Book For  book-img-for-question

Fundamental Accounting Principles Volume II

ISBN: 978-1260305838

16th Canadian edition

Authors: Kermit Larson, Tilly Jensen, Heidi Dieckmann

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