Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Kimble, Sykes, and Gerard open an accounting practice on January 1, 2019, in Chicago, Illinois, to be operated as a partnership. Kimble and Sykes will

image text in transcribed
image text in transcribed
Kimble, Sykes, and Gerard open an accounting practice on January 1, 2019, in Chicago, Illinois, to be operated as a partnership. Kimble and Sykes will serve as the senior partners because of their years of experience. To establish the business, Kimble, Sykes, and Gerard contribute cash and other properties valued at $323,000 $237,500, and $149,500, respectively. An articles of partnership agreement is drawn up stipulating the following: Personal drawings are allowed annually up to an amount equal to 10 percent of the partner's beginning capital balance for the year. Profits and losses are allocated according to the following plan: 1. Each partner receives an annual salary allowance of $55 per billable hours worked 2. Interest is credited to the partners' capital accounts at the rate of 12 percent of the beginning capital balance for the year. 3. Kimble and Sykes are eligible for an annual bonus of 10 percent of net income after subtracting the bonus, salary allowance, and interest. The agreement also states that there will be no bonus if there is a net loss or if salary and interest result in a negative remainder of net income to be distributed 4. Any remaining partnership profit or loss is to be divided evenly among all partners. On January 1, 2020, the partners admit Nichols to the partnership. Nichols 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 profit and loss sharing agreement is not altered upon Nichols' entrance into the firm; the general provisions continue to be applicable. The billable hours for the partners during the first three years of operation follow: Kimble Sykes Gerard Nichols 2019 4,469 4,200 4,060 2020 1,800 1,500 1,380 1,560 2021 1,880 1,620 1,310 1,550 On January 1, 2020, the partners admit Nichols to the partnership. Nichols 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 profit and loss sharing agreement is not altered upon Nichols' entrance into the firm; the general provisions continue to be applicable. The billable hours for the partners during the first three years of operation follow: Kimble Sykes Gerard Nichols 2019 4,460 4,200 4,060 @ 2020 2021 1,800 1,880 1,500 1,620 1,380 1,310 1,560 1,550 The partnership reports net income (loss) for 2019 through 2021 as follows: 2019 2020 2021 $ 351,000 (19,300) 546,000 Each partner withdraws the maximum allowable amount each year. a. Prepare schedules that allocate each year's net income to the partners. b. Prepare in appropriate form a statement of partners' capital for the year ending December 31, 2021. Complete this question by entering your answers in the tabs below. Reg A 2019 Req A 2020 Reg A 2021 Reg B Prepare schedules that allocate for 2019 net income to the partners. (Loss amount: Net Income Allocation-2019 Whentilo

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting Managing Business Information Preliminary Edition Volume I

Authors: Thomas L. Albright , Robert W. Ingram

1st Edition

0324061625, 978-0324061628

More Books

Students also viewed these Accounting questions

Question

=+d) Can you reject the null hypothesis of part c? Explain.

Answered: 1 week ago

Question

What is one of the skills required for independent learning?Explain

Answered: 1 week ago

Question

What strategy for LMD is needed during a recession?

Answered: 1 week ago

Question

How can reflection for leaders and managers be implemented?

Answered: 1 week ago