R. Huma and W. How have capital balances on July 1, 2020, of $62,000 and $58,000, respectively.

Question:

R. Huma and W. How have capital balances on July 1, 2020, of $62,000 and $58,000, respectively. The partnership profit-sharing agreement specifies:

1. salary allowances of $30,900 for Huma and $21,900 for How,

2. interest at 6% on beginning capital balances, and

3. for the remaining profit or loss to be shared 60% by Huma and 40% by How.


Instructions
a. Prepare a schedule showing the division of profit for the year ended June 30, 2021, assuming profit is

(1) $70,000, 

(2) $55,000.

b. Journalize the allocation of profit in each of the situations in part (a).

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

Accounting Principles Volume 2

ISBN: 978-1119502555

8th Canadian Edition

Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak

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