Florence, Kilara and Medika are 3 sisters who formed a partnership on 1 July 2018 to manufacture culturally relevant textiles Their equity in the partnership is as follows Capital Florence $140,000 Capital Kilara $80,000 Capital Medika $30,000 Retained Earnings Florence $17,500 Retained Earnings Kilara $22,000 Retained Earnings Medika $16,000 The partnership agreement provides for the following Salary of $55,000 to be paid to Florence as manager Killara and Medika each receive an annual salary of $50,000 for their respective roles in the partnership Interest to be charged at 8 per annum on opening capital balances Interest on annual drawings is charged at 10 per annum During the year Florence withdrew $7,500, Kilara withdrew $12,000 and Medika withdrew $10,000 Residual profits are shared in proportion to each partner's initial capital balances Partnership profit at 30 June 2019 totalled $220,000 Required A schedule for the allocation of partnership profit based on the above partnership agreement and determine the total profit to be allocated to each partner

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Posted on Jun 28, 2024

Florence, Kilara and Medika are 3 sisters who formed a partnership on 1 July 2018 to manufacture culturally-relevant textiles. Their equity in the partnership is

Florence, Kilara and Medika are 3 sisters who formed a partnership on 1 July 2018 to manufacture culturally-relevant textiles. Their equity in the partnership is as follows:

Capital - Florence = $140,000

Capital - Kilara. = $80,000

Capital - Medika. = $30,000

Retained Earnings - Florence = $17,500

Retained Earnings - Kilara = $22,000

Retained Earnings - Medika = $16,000

The partnership agreement provides for the following:

Salary of $55,000 to be paid to Florence as manager. Killara and Medika each receive an annual salary of $50,000 for their respective roles in the partnership.
Interest to be charged at 8% per annum on opening capital balances.
Interest on annual drawings is charged at 10% per annum. During the year Florence withdrew $7,500, Kilara withdrew $12,000 and Medika withdrew $10,000.
Residual profits are shared in proportion to each partner's initial capital balances.
Partnership profit at 30 June 2019 totalled $220,000.

Required:

A schedule for the allocation of partnership profit based on the above partnership agreement and determine the total profit to be allocated to each partner.