Distribution of Partnership Income and Preparation of a Statement of Partners' Capital LO 15 5 The income statement for the Apple Jack Partnership for the year ended December 31, 20X5, follows APPLE JACK PARTNERSHIP Income Statement For the Year Ended December 31, 20X5 Net Sales $ 318,000 Cost of Goods Sold (194,000 ) Gross Margin $ 124,000 Operating Expenses (35,000 ) Net Income $ 89,000 Additional Information for 20X5 Apple began the year with a capital balance of $44,100 Jack began the year with a capital balance of $120,000 On April 1, Apple invested an additional $16,200 into the partnership On August 1, Jack invested an additional $21,000 into the partnership Throughout 20X5, each partner withdrew $500 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 Apple Jack 1 Interest on average capital balances 6 6 2 Bonus on net income before the bonus but after interest on average capital balances 10 3 Salaries $ 19,000 $ 21,000 4 Residual (if positive) 70 30 Residual (if negative) 50 50 Required a Prepare a schedule that discloses the distribution of partnership net income for 20X5 (Do not round intermediate calculations Round your final answers to nearest whole dollar Amounts that are to be deducted from an individual partner's capital balance should be entered with a minus sign ) b Prepare the statement of partners capital at December 31, 20X5 (Do not round intermediate calculations Round your final answers to nearest whole dollar Amounts that are to be deducted from an individual partner's capital balance should be entered with a minus sign ) c How would your answer to part a change if all of the provisions of the income distribution plan were the same except that the salaries were $33,000 to Apple and $39,440 to Jack (Do not round intermediate calculations Round your final answers to nearest whole dollar Amounts that are to be deducted from an individual partner's capital balance should be entered with a minus sign )

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Distribution of Partnership Income and Preparation of a Statement of Partners' Capital LO 15-5 The income statement for the Apple-Jack Partnership for the year ended

Distribution of Partnership Income and Preparation of a Statement of Partners' Capital LO 15-5

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

APPLE-JACK PARTNERSHIP Income Statement For the Year Ended December 31, 20X5
Net Sales	$	318,000
Cost of Goods Sold		(194,000	)
Gross Margin	$	124,000
Operating Expenses		(35,000	)
Net Income	$	89,000

Additional Information for 20X5

Apple began the year with a capital balance of $44,100.
Jack began the year with a capital balance of $120,000.
On April 1, Apple invested an additional $16,200 into the partnership.
On August 1, Jack invested an additional $21,000 into the partnership.
Throughout 20X5, each partner withdrew $500 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:

		Apple			Jack
1.	Interest on average capital balances		6	%		6	%
2.	Bonus on net income before the bonus but after interest on average capital balances		10	%
3.	Salaries	$	19,000		$	21,000
4.	Residual (if positive)		70	%		30	%
	Residual (if negative)		50	%		50	%

Required:
a. Prepare a schedule that discloses the distribution of partnership net income for 20X5. (Do not round intermediate calculations. Round your final answers to nearest whole dollar. Amounts that are to be deducted from an individual partner's capital balance should be entered with a minus sign.)

b. Prepare the statement of partners’ capital at December 31, 20X5. (Do not round intermediate calculations. Round your final answers to nearest whole dollar. Amounts that are to be deducted from an individual partner's capital balance should be entered with a minus sign.)

c. How would your answer to part a change if all of the provisions of the income distribution plan were the same except that the salaries were $33,000 to Apple and $39,440 to Jack? (Do not round intermediate calculations. Round your final answers to nearest whole dollar. Amounts that are to be deducted from an individual partner's capital balance should be entered with a minus sign.)