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Rod Dall Co. reports net income of $75,000. The income ratios are Rod 60% and Dall 40%.

Indicate the division of net income to each partner.

	Amount
Rod
Dall

Prepare the entry to distribute the net income.

Account	Debit	Credit

PFW Co. reports net income of $45,000. Partner salary allowances are Pitts $15,000, Filbert $5,000, and Witten $5,000. Indicate the division of net income to each partner, assuming the income ratio is 50:30:20, respectively.

	Pitts	Filbert	Witten	Total
Salary allowance
Remaining income:
Pitts
Filbert
Witten
Total remainder
Total division of net income

Mark Rensing has prepared the following list of statements about partnerships. Identify each statement as true or false.

	1.	A partnership is an association of three or more persons to carry on as co-owners of a business for profit.
	2.	The legal requirements for forming a partnership can be quite burdensome.
	3.	A partnership is not an entity for financial reporting purposes.
	4.	The net income of a partnership is taxed as a separate entity.
	5.	The act of any partner is binding on all other partners, even when partners perform business acts beyond the scope of their authority.
	6.	Each partner is personally and individually liable for all partnership liabilities.
	7.	When a partnership is dissolved, the assets legally revert to the original contributor.
	8.	In a limited partnership, one or more partners have unlimited liability and one or more partners have limited liability for the debts of the firm.
	9.	Mutual agency is a major advantage of the partnership form of business.

Suzy Vopat has owned and operated a proprietorship for several years. On January 1, she decides to terminate this business and become a partner in the firm of Vopat and Sigma. Vopat's investment in the partnership consists of $12,000 in cash, and the following assets of the proprietorship: accounts receivable $14,000 less allowance for doubtful accounts of $2,000, and equipment $30,000 less accumulated depreciation of $4,000. It is agreed that the allowance for doubtful accounts should be $3,000 for the partnership. The fair value of the equipment is $23,500. Journalize Vopat's admission to the firm of Vopat and Sigma.

Date	Account	Debit	Credit

McGill and Smyth have capital balances on January 1 of $50,000 and $40,000, respectively. The partnership income-sharing agreement provides for (1) annual salaries of $22,000 for McGill and $13,000 for Smyth, (2) interest at 10% on beginning capital balances, and (3) remaining income or loss to be shared 60% by McGill and 40% by Smyth.

Prepare a schedule showing the distribution of net income, assuming net income is $50,000 and journalize the allocation.

Division of Net Income
	McGill	Smyth	Total
Salary allowance
Interest allowance
McGill
Smyth
Total interest
Total salaries and interest
Remaining income
McGill
Smyth
Total remainder
Total division of net income

Account	Debit	Credit

Prepare a schedule showing the distribution of net income, assuming net income is $36,000 and journalize the allocation.

Division of Net Income
	McGill	Smyth	Total
Salary allowance
Interest allowance
Total salaries and interest
Remaining deficiency
McGill
Smyth
Total remainder
Total division of net income

Account	Debit	Credit

At the end of its first year of operations on December 31, 2014, NBS Company's accounts show the following.

Partner	Drawings	Capital
Art Niensted	$23,000	$48,000
Greg Bolen	14,000	30,000
Krista Sayler	10,000	25,000

The capital balance represents each partner's initial capital investment. Therefore, net income or net loss for 2014 has not been closed to the partners' capital accounts.

Journalize the entry to record the division of net income for the year 2014 under the assumption net income is $30,000. Income is shared 6:3:1.

Account	Debit	Credit

Journalize the entry to record the division of net income for the year 2014 under the assumption net income is $40,000. Niensted and Bolen are given salary allowances of $15,000 and $10,000, respectively. The remainder is shared equally.

Account	Debit	Credit

Journalize the entry to record the division of net income for the year 2014 under the assumption net income is $19,000. Each partner is allowed interest of 10% on beginning capital balances. Niensted is given a $15,000 salary allowance. The remainder is shared equally.

Account	Debit	Credit

Prepare a schedule showing the division of net income under assumption (a) above.

Division of Net Income
	A. Niensted	G. Bolen	K. Sayler	Total
Salary allowance
Interest allowance on capital
A. Niensted
G. Bolen
K. Salyer
Total interest
Total salaries and interest
Remaining deficiency
A. Niensted
G. Bolen
K. Sayler
Total remainder
Total division of net income

Prepare a partners' capital statement for the year under assumption (c) above.

NBS COMPANY Partners

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