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Dividing Partnership Net Income Required: Steve Jack and Chelsy Stevens formed a partnership, dividing income as follows: Annual salary...

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Accounting

Dividing Partnership Net Income

Required:

Steve Jack and Chelsy Stevens formed a partnership, dividingincome as follows:

  1. Annual salary allowance to Jack of $87,360.
  2. Interest of 6% on each partner's capital balance on January1.
  3. Any remaining net income divided to Jack and Stevens, 1:2.

Jack and Stevens had $63,000 and $87,000, respectively, in theirJanuary 1 capital balances. Net income for the year was $156,000.How much is distributed to Jack and Stevens?

Note: Compute partnership share.
Jack: $
Stevens: $

Revaluing and Contributing Assets to a Partnership

Demarco Lee invested $28,000 in the Camden & Saylerpartnership for ownership equity of $28,000. Prior to theinvestment, equipment was revalued to a market value of $294,000from a book value of $249,000. Kevin Camden and Chloe Sayler sharenet income in a 1:3 ratio.

Required:

a. Provide the journal entry for therevaluation of equipment.

For a compound transaction, if an amount box does not require anentry, leave it blank.

b. Provide the journal entry to admit Lee.

Answer & Explanation Solved by verified expert
4.4 Ratings (859 Votes)

1.) Jack Stevens Total $
Net income 156,000
Less: Salary Allowance      87,360              -        87,360
Balance     68,640
Less: Interest Allowance @ 6% of january 1 capital        3,780        5,220        9,000
Balance     59,640
Less: remaining in 1:2      19,880      39,760      59,640
Balance              -  
Partnership Share 111,020     44,980 156,000
Partnership Share
Jack $ 111,020
Stevens $ 44,980
2.)
a.) Account Titles Debit $ Credit $
Equipment (294,000 - 249,000 )      45,000
Kevin Camden, Capital (45,000 x 1/4 )      11,250
Chole Sayler, Capital ( 45,000 x 3/4 )      33,750
b.) Account Titles Debit $ Credit $
Cash      28,000
Demarco Lee, Capital      28,000

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