Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Business partners Baliva, Masi, and Romalati have a partnership agreement that outlines a detailed formula for sharing profits and losses. Baliva, Masi, and Romalati earn

 Business partners Baliva, Masi, and Romalati have a partnership agreement that outlines a detailed formula for sharing profits and losses. Baliva, Masi, and Romalati earn annual salaries of $60 000, $70 000, and $80 000 respectively. They also earn a fixed percentage of interest on their capital balances which are $50 000, $50 000, and $70 000 respectively. Any remaining income is allocated using an income ratio of 30%, 30% and 40% respectively. Calculate the net income allocation and record the journal entry under the following unrelated situations:

 

(a) net income of $400 000, and 7% on capital balances

(b) net income of $50 000, and 5% on capital balances.

2a) Baliva Masi Romalati Total
Balance In Capital
Income Ratio
Net Income
Income Distribution
Salary Allowance
Remaining Income/Deficiency
Interest Allowance
Remaining Income/Deficiency
Fixed Ratio
Remaining Income/Deficiency
Division of Net Income
Date Particulars PR Debit Credit
2b) Baliva Masi Romalati Total
Balance In Capital
Income Ratio
Net Income
Income Distribution
Salary Allowance
Remaining Income/Deficiency
Interest Allowance
Remaining Income/Deficiency
Fixed Ratio
Remaining Income/Deficiency
Division of Net Income
                             
DateParticularsPRDebitCredit


Step by Step Solution

There are 3 Steps involved in it

Step: 1

a Net income of 400000 and 7 on capital balances To calculate the net income allocation we need to follow the partnership agreements formula 1 Calculate the interest allowance based on the fixed perce... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting A Level And AS Level

Authors: Harold Randall

1st Edition

0521539935, 978-0521539937

More Books

Students also viewed these Finance questions

Question

Calculate 6.6 % of $666.66.

Answered: 1 week ago