Question
McGill and Smyth have capital balances on January 1 of $ 40,000 and $ 43,000, respectively. The partnership income-sharing agreement provides for (1) annual salaries
McGill and Smyth have capital balances on January 1 of $ 40,000 and $ 43,000, respectively. The partnership income-sharing agreement provides for (1) annual salaries of $ 20,000 for McGill and $ 10,000 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.
Prepare a schedule showing the distribution of net income, assuming net income is $ 24,000. (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 | $ enter a dollar amount | $ enter a dollar amount | $ enter a dollar amount | |||
Interest allowance | enter a dollar amount | enter a dollar amount | enter a dollar amount | |||
Total salaries and interest | enter a total of the two previous amounts | enter a total of the two previous amounts | enter a total of the two previous amounts | |||
Remaining income / deficiency | enter a dollar amount | enter a dollar amount | enter a dollar amount | |||
Total division of net income | $ enter a total amount | $ enter a total amount | $ enter a total amount |
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.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started