Norr and Caylor established a partnership on January 1, 2019. Norr invested cash of $100,000 and Caylor invested $30,000 in cash and equipment with a book value of $40,000 and fair value of $50,000. For both partners, the beginning capital balance was to equal the initial investment. Norr and Caylor agreed to the following procedure for sharing profits and losses:

• 12% interest on the yearly beginning capital balance
• $10 per hour of work that can be billed to the partnership's clients
• the remainder divided in a 3:2 ratio

The Articles of Partnership specified that each partner should withdraw no more than $1,000 per month, which is accounted as direct reduction of that partners capital balance.

For 2019, the partnership's income was $70,000. Norr had 1,000 billable hours, and Caylor worked 1,400 billable hours. In 2020, the partnership's income was $24,000, and Norr and Caylor worked 800 and 1,200 billable hours respectively. Each partner withdrew $1,000 per month throughout 2019 and 2020.

Complete the following:

• Determine the amount of net income allocated to each partner for 2019.
• Determine the balance in both capital accounts at the end of 2019.
• Determine the amount of net income allocated to each partner for 2020. (Round all calculations to the nearest whole dollar).
• Determine the balance in both capital accounts at the end of 2020 to the nearest dollar.

 

ACC497 Partnership Chapter 2 Input your name here-----------> Norr, Caylor Partnership Fill in the amount below. (Replace the? Below) (a) Amount of net income allocated to each partnership for 2019: Norr Caulor Interest ? ? Total ? Compensation ? ? ? Remainder (60%, 40% split) ? ? Net income allocated for 2019 ? ? 222 ? ? (b) Balance in both capital accounts at the end of 2019: Norr Caulor Beginning capital 2019 ? ? Total ? Net income allocated for 2019 ? ? Withdrawal (1,000 12) ? ? Ending capital balance 2019 ? ? 222 ? ? ? (a) Amount of net income allocated to each partnership for 2020: