Robin Dewey, Kami Karlin, and Dean DeCastro, have formed a partnership. Dewey invested \(\$ 20,000\); Karlin, \(\$ 40,000\); and DeCastro, \(\$ 60,000\). Dewey will manage the store, Karlin will work in the store three-quarters of the time, and DeCastro will not work in the business.

\section*{Required}

1. Compute the partners' shares of profits and losses under each of the following plans.

a. Net income is \(\$ 87,000\), and the articles of partnership do not specify how profits and losses are shared.

b. Net loss is \(\$ 47,000\), and the partnership agreement allocates 45 percent of profits to Dewey, 35 percent to Karlin, and 20 percent to DeCastro. The agreement does not discuss the sharing of losses.

c. Net income is \(\$ 104,000\). The first \(\$ 50,000\) is allocated on the basis of salaries of \(\$ 34,000\) for Dewey and \(\$ 16,000\) for Karlin. The remainder is allocated on the basis of partner capital contributions.

d. Net income for the year ended September \(30,19 \mathrm{X} 4\), is \(\$ 91,000\). The first \(\$ 30,000\) is allocated on the basis of partner capital contributions. The next \(\$ 30,000\) is based on service, with \(\$ 20,000\) going to Dewey and \(\$ 10,000\) going to Karlin. Any remainder is shared equally.

2. Revenues for the year ended September 30, 19X4, were \(\$ 572,000\), and expenses were \(\$ 481,000\). Under plan (d), prepare the partnership income statement for the year.

3. How will what you learned in this problem help you manage a partnership?

Recording changes in partnership capital

\((O b j .4,5)\)