Question
What is the solution to part b of this problem? The Prince-Robbins partnership has the following capital account balances on January 1, 2015: Prince, Capital
What is the solution to part "b" of this problem?
The Prince-Robbins partnership has the following capital account balances on January 1, 2015:
Prince, Capital | $ | 165,000 |
Robbins, Capital | 155,000 | |
Prince is allocated 60 percent of all profits and losses with the remaining 40 percent assigned to Robbins after interest of 9 percent is given to each partner based on beginning capital balances. |
On January 2, 2015, Jeffrey invests $94,000 cash for a 20 percent interest in the partnership. This transaction is recorded by the goodwill method. After this transaction, 9 percent interest is still to go to each partner. Profits and losses will then be split as follows: Prince (50%), Robbins (30%), and Jeffrey (20%). In 2015, the partnership reports a net income of $34,000.
b. Determine the allocation of income at the end of 2015 for Prince, Robbins, and Jeffrey.
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