The capital account balances on January 1, 2017, for Carla and Dalia were $140,000 and $210,000, respectively. During 2017, the Carla and Dalia partnership had sales of $520,000, cost of goods sold of $182,000, and operating expenses of $46,000.

Instructions: Prepare a schedule which clearly sets out the division of income or loss to the partners for 2017.

1.Since Carla will work only part time in the partnership, she will be allocated a salary allowance that is one half the salary allowance allocated to Dalia. Dalia's salary allowance will be 20% of sales.

2.Both partners will be given an interest allowance of 20% on their beginning-of-the-year capital account balances.

3.The remaining income and loss is to be divided 40% to Carla and 60% to Dalia.

Question # 2

The balance sheet of the Tri Brothers Partnership just prior to liquidation appears below:

Tri Brothers Partnership

Balance Sheet

December 31, 2017

AssetsLiabilities and Owners' Equity

Cash$ 140,000Liabilities$240,000

Noncash assets380,000George, Capital40,000

Laith, Capital160,000

Maher, Capital 80,000

$520,000$520,000

Other information:

1.The partners George, Laith, and Maher share profits and losses in the ratio of 6:3:1.

2.The noncash assets are sold for $280,000.

3.The liabilities are paid in full.

4.The remaining assets are distributed to the partners. Assume that if any partner has a capital deficiency, he will not be able to pay the amount owed to the partnership.

Instructions:

a. Prepare the five entries to record the liquidation of the Tri Brothers Partnership.

b. Prepare the cash payment Schedule