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Problem 1429 (L0144, 145, 14-6, 149) Gray, Stone, and Lawson open an accounting practice on January 1, 2013, in San Diego, California, to be operated as a partnership. Gray and Stone will serve as the senior partners because of their years of experience. To establish the business, Gray, Stone, and Lawson contribute cash and other properties valued at $210,000, $180,000, and $90,000, respectively. An articles of partnership agreement is drawn up. It has the following stipulations: Personal drawings are allowed annually up to an amount equal to 10 percentot the beginning capital balance for the year. Prots and losses are allocated according to the following plan: (1 :1 A salary allowance is credited to each partner in an amount equal to $3 per billable hour worked by that individual during the year. (2:1lnterest is credited to the partners' capital accounts at the rate of 12 percent of the average monthly balance for the year (computed without regard for current income or drawings}. (3)An annual bonus is to be credited to Gray and Stone. Each bonus is to be 10 percent of net income after subtracting the bonus, the salary allowance, and the interest. Also included in the agreement is the provision that the bonus cannot be a negative amount. (4)Any remaining partnership prot or loss is to be divided evenly among all partners. Because of monetary problems encountered in getting the business started, Gray invests an additional $9,100 on May 1,. 2013. On January 1, 2014, the partners allow Monet to buy into the partnership. Monet contributes cash directly to the business in an amount equal to a 25 percent interest in the book value of the partnership property subsequent to this contribution. The partnership agreement as to splitting profits and losses is not altered upon Monet's entrance into the rm; the general provisions continue to be applicable. The billable hours for the partners during the rst three years of operation follow: 2013 2014 2015 Gray 1,?10 1,300 1,300 Stone 1,440 1,500 1,520 Lawson 1,300 1,300 1,310 Monet 0 1,100 1,500 The partnership reports net income for 2013 through 2015 as follows: The partnership reports net inoome for 2013 through 2015 as follows: 2013 0 05,000 2014 (20,400) 2015 152,000 Each partner withdraws the maximum allowable amount each year. a. Determine the allocation of income for each of then three years. [Lose amounts should be indicated with a minus sign. Round your answers to the nearest dollar amou nth} Salary allowance Interest Bonus Remaining pretoss Income allocation Salary allowance -- Bonus mm... - m ----- ----- ____n 5 a s a $ :3 s :3 Income allocation $ 0 Salary allowance Remaining protlloss Income allocation Salary allowance Interest Bonus Remaining protilcce Incpme allecaticn b. Prepare in appropriate term a statement of parlners' capital for the year ending December 31, 2015. (Amounts to be deducted should be indicated with minus sign. Raund your answers ta nearest dallar ameu nts .] Capital Account Balances 1I1J15 12i1i15 mm - - Ending Balances Answer is complete but not entirely correct Salary allowance $ 14.40thll $ 12,000.] $ 11,040.] $ 9,520.] $ 43.950 Interest 27,333\"! 22,257,; 11,107,] 20,244'4I 30,973 Bonus OJ DJ OJ OJ 0 Remaining protlloas (37,084)J (37,084)J (37,084)J (143,336)\" (259,588) Income allocation $ 4.684 $ (2,827) $ (14,937) $ (118,572) $ (131,652) Answer is complete but not entirely correct Salary allowance $ 14.40thll $ 12,000.] $ 11,040.] $ 9,520.] $ 43.950 Interest 27,333\"! 22,257,; 11,107,] 20,244'4I 30,973 Bonus OJ DJ OJ OJ 0 Remaining protlloas (37,084)J (37,084)J (37,084)J (143,336)\" (259,588) Income allocation $ 4.684 $ (2,827) $ (14,937) $ (118,572) $ (131,652)