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Dividing partnership income

Dahl and Westhoff have decided to form a partnership. They have agreed that Dahl is to invest $$261,000$ and that Westhoff is to invest $$87,000.$ Dahl is to devote one$-$half time to the business, and Westhoff is to devote full time. The following plans for the division of income are being considered:

Equal division.

In the ratio of original investments.

In the ratio of time devoted to the business.

Interest of $6\%$ on original investments and the remainder equally.

Interest of $6\%$ on original investments, salary allowances of $$40$Instructions

Wartin Farley and Ashley Clark fomed a limited liability company with an operating agreement that provided a salany allowance of $$36,200$

and $$30,700$ to each member, respectively. In addition, the operating agreement specified an income$-$sharing ratio of $3$:$1.$ The two members

withdrew amounts equal to their salany allowances. Revenues were $$668,000$ and expenses were $$520,000,$ for a net income of $$148,000.$

Note: The reduction in members' equity from withdrawals would be disclosed on the statement of members' equity.

a$.$ Determine the division of $$148,000$ net income for the year.

b$.$ On December $31,$ provide joumal entries to close the $(1)$ re venues and expenses and $(2)$ drawing accounts for the two members.

c$.$ If the net income was kess than the sum of the salary allowances, how would income be divided between the two members of the

$LC?$

First Question

a$.$ Determine the division of $$148,000$ net income for the year.

Final Question

c$.$ It the net income was kess than the sum of the salary allowances, how would income be divided between the two members of the LLC$?$

If the net income of the LLC was less than the sum of the salany allowances, both members would still be debited with their salany

allowances. From this amount, each partner would add his or her share of the excess of the total salany allowance over the net

income. Thus, the difference between the net income and total salany allowances would be allocated to each partner as a deduction. $.$

according to tr

General Journal

b$.$ Or December $31,$ novide joumal entries to close the $(1)$ re venues and expenses and $(2)$ drawing accounts for the two members.