Exercise 12-04 a-b (Video)

McGill and Smyth have capital balances on January 1 of $53,000 and $42,000, respectively. The partnership income-sharing agreement provides for (1) annual salaries of $18,000 for McGill and $15,000 for Smyth, (2) interest at 10% on beginning capital balances, and (3) remaining income or loss to be shared 60% by McGill and 40% by Smyth.

Exercise 12-04 a-b (Video) McGill and Smyth have capital balances on January 1 of $53,000 and $42,000, respectively. The partnership income-sharing agreement provides for (1) annual salaries of $18,000 for McGill and $15,000 for Smyth, (2) interest at 10% on beginning capital balances, and (3) remaining income or loss to be shared 60% by McGill and 40% by Smyth. Your answer is partially correct. Try again. (1) Prepare a schedule showing the distribution of net income, assuming net income is $78,000. (If an amount reduces the account balance then enter with a negative sign preceding the number or parenthesis, e.g.-15,000, (15,000).) DIVISION OF NET INCOME McGill Smyth Total Salary allowance 18000 15000 33000 Interest allowance 5300 4200 95001 T- Total salaries and interest 23300 19200 42500 Remaining income / deficiency 21300 14200 35500 Total division of net income 44600 33400 78000 Prepare a schedule showing the distribution of net income, assuming net income is $26,000. (If an amount reduces the account balance then enter with a negative sign preceding the number or parenthesis, e.g. -15,000, (15,000).) DIVISION OF NET INCOME McGill Smyth Total Salary allowance 18000 15000 33000 Interest allowance 5300 4200 9500 T Total salaries and interest 23300 19200 42500 Remaining income / deficiency (9900) (6600) (16500) Total division of net income 33200 25800 26000 LINK TO TEXT VIDEO: SIMILAR EXERCISE Your answer is partially correct. Try again. Journalize the allocation of net income in each of the situations above. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record entries in the order presented in the previous part.) No. Account Titles and Explanation Debit Credit 1. Income Summary (16500) X McGill, Capital (9900) X Smyth, Capital (6600) 2. Income Summary 35500 x Smyth, Capital 21300 X McGill, Capital 14200