Problem 1

The partnership agreement of Alice, Baron & Crane was formed on January 2, 2017. The original cash investments were as follows:

Alice $ 96,000

Baron 144,000

Crane 216,000

According to the partnership contract, the partners were to be remunerated as follows:

1. Salaries of $14,400 for Alice, $12,000 for Baron, and $13,600 for Crane.
2. Interest at 12% on the average capital account balances during the year.
3. Remainder divided 40% to Alice, 30% to Baron and 30% to Crane.

Income before partner withdrawals during the year ended December 31, 2017 was $92,080. During 2017 Alice invested additional capital of $24,000 in the partnership on July 1; Crane withdrew capital of $36,000 from the partnership on October 1. Each of the partners had monthly withdrawals of $1,250 against their shares of income for the year.

REQUIRED: Prepare a schedule showing the allocation of the partnership income to each partner.