P 15-1

Profit Allocation

Day and Night formed and accounting partnership in 2008 Capital transaction for Day and Night are

as follows:

Date

Transactions

Amount

Day

1-Jan

Beginnng balance

75,000

1-Apr

Withdrawal

18,750

1-Jun

Investment

37,500

1-Nov

Investment

18,750

Night

1-Jan

Beginning balance

37,750

1-Jul

Investment

18,750

1-Oct

Withdrawal

9,375

Partnership net income for the year ended December 31, 2008: is $68,400 before considering salaries

or interest.

Required:

Determine the amount of profit that is allocated to Day and Night in accordance with each of the following

independent profit-sharing agreement:

1) Day and Night failed to provide a profit-sharing arrangement in the articles of partnership and fail

to comprimise on an agreement.

2) Net income is to be allocated 60% to Day and 40% to Night.

3) Net income is to be allocatd in the ration of ending capital balances

4) Net income is to be allocated in the ratio average capital balances.

5) Interest of 15% is to be granted on average capital balances salaries of $15,000 and

$8,250 are to be allocated to Day and Night, respectively, and the remainder is to be divided equally.