Question
Problem 4 The partnership agreement of L, M, N and O was formed on January 2, 2020. The original cash investments were as follows: L,
Problem 4
The partnership agreement of L, M, N and O was formed on January 2, 2020. The original cash investments were as follows:
L, Capital $ 64,000
M, Capital 116,000
N. Capital 150,000
O, Capital 200,000
According to the partnership contract, the partners were to be remunerated as follows:
- Fixed Amounts of $20,000 for M and $15,000 for O.
- Interest at 8% on the average capital account balances during the year.
- Remainder divided as follows
L - 20%
M 15%
N 40%
O 25%
The partnership incurred a loss of $35,000 during 2020.
During 2020 L invested an additional $25,000 in capital on August 1, 2020. M made two capital withdrawals of $10,000 each on April 1, 2020 and September 1, 2020 and O made a capital contribution of $30,000 on May 1, 2020.
REQUIRED: Prepare a schedule showing the allocation of the partnership income to each partner for 2020.
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