E15-4 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 Cost of Goods Sold Gross Margin Operating Expenses Net Income $ 304,000 (196,000) $ 108,000 (33,000) $ 75,000 Additional Information for 20X5 1. Apple began the year with a capital balance of $44,400. 2. Jack began the year with a capital balance of $114,000. 3. On April 1, Apple invested an additional $17,100 into the partnership. 4. On August 1, Jack invested an additional $24,000 into the partnership. 5. Throughout 20X5, each partner withdrew $400 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 2. Bonus on net income before the bonus but after interest on average capital balances 3. Salaries 6% 10% 6% $17,000 $19,000 4. Residual (if positive) Residual (if negative) 70% 50% 30% 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.) Apple Jack Total Profit percentage (if positive) Profit percentage (if negative) Net income 70% 30 % 100 % 50 % 50 % 100 % $ 75,000 Interest on average capital balances Bonus on net income before the bonus but after interest 0 $ 75,000 0 $ 75,000 Salaries 0 $ Residual income (loss) - allocate 75,000 0 Total $ 0 $ 0 $ 75,000 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.) APPLE - JACK PARTNERSHIP Statement of Partners' Capital For the Year Ended December 31, 20X5 Apple Jack Total Balance, January 1, 20X5 Net income distribution $ 0 0 0 $ 0 $ 0 $ 0 0 Balance, December 31, 20X5 $ 0 $ 0 $ 0