Ex$.176$

Carraway and Boos have a partnership agreement which includes the following provisions regarding sharing net income or net loss:

A salary allowance of $$48,000$ to Carraway and $$36,000$ to Boos.

An interest allowance of $10\%$ on capital balances at the beginning of the year.

The remainder to be divided $60\%$ to Carraway and $40\%$ to Boos.

The capital balance on January $1,2017,$ for Carraway and Boos was $$90,000$ and $$120,000,$ respectively. During $2017,$ the Carraway and Boos Partnership had sales of $$495,000,$ cost of goods sold of $$290,000,$ and operating expenses of $$85,000.$

Instructions

Prepare an income statement for the Carraway and Boos Partnership for the year ended December $31,2017.$ As a part of the income statement, include a Division of Net Income to each of the partners.

Ans: N$/$A$,$ LO: $2,$ Bloom: AP$,$ Difficulty: Medium, Min: $15,$ AACSB: Analysis, AICPA BB: Legal$/$Regulatory Perspective, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Reporting