PAUL PAM TOTAL

Allowances: Beg. Capital

1. Interest (10%) 1,750.00 2,362.50 4,112.50 PAUL 15,000.00
2. Salaries 6,000.00 4,000.00 10,000.00 PAM 25,000.00
Remainder 4,082.81 6,804.69 10,887.50 TCC 40,000.00
Share in Net Income 11,832.81 13,167.19 25,000.00

Average Capital
PAUL Movement Ave. Mo. PAM Movement Ave. Mo.
1/1 15,000.00 12/12 15,000.00 1/1 25,000.00 12/12
4/3 4,000.00 9/12 3,000.00 3/5 (4,500.00) 10/12
8/23 (3,000.00) 4/12 (1,000.00) 7/6 3,500.00 6/12
10/31 3,000.00 2/12 500.00 10/7 2,500.00 3/12
Average Capital 17,500.00 Average Capital

Average Capital
PAUL Balance PAM Balance
1/1 15,000.00 3 45,000.00 1/1 25,000.00 2
4/3 19,000.00 5 95,000.00 3/5 20,500.00 4
8/23 16,000.00 2 32,000.00 7/6 24,000.00 3
10/31 19,000.00 2 38,000.00 10/7 26,500.00 3
210,000.00
Divided by Total months 12 Divided by Total months
Average Capital 17,500.00 Average Capital

Journal Entries:

Income Summary 25,000.00

Paul, Capital 11,832.81
Pam, Capital 13,167.19

Total Capital at year end:

PAUL PAM
3,000.00 15,000.00 4,500.00 25,000.00
4,000.00 3,500.00
3,000.00 2,500.00
11,832.81 Share in NI 13,167.19 Share in NI
30,832.81 39,667.19
eg. Capital
37.50%
62.50%

25,000.00
(3,750.00)
1,750.00
625.00
23,625.00

50,000.00
82,000.00
72,000.00
79,500.00
283,500.00
12
23,625.00
 40% 30% 30%
AA BB CC TOTAL
Allowances
1. Salaries 7,200.00 6,000.00 6,800.00 20,000.00
2. Interest 6,480.00 8,640.00 12,420.00 27,540.00
Remainder (600.00) (450.00) (450.00) (1,500.00)
Share in Net Income 13,080.00 14,190.00 18,770.00 46,040.00

AVERAGE CAPITAL
Average Capital
AA Movement Ave. Mo. BB Movement
1/2 48,000.00 12/12 48,000.00 1/1 72,000.00
7/1 12,000.00 6/12 6,000.00
Average Capital 54,000.00 Average Capital

Monthly Drawings of Partners

Monthly Salary 373.00
Total Months 12.00
Total drawings/Partner 4,476.00

Monthly Journal Entry

AA, Drawings 373.00
BB, Drawings 373.00
CC, Drawings 373.00
Cash 1,119.00

Journal Entries at Year End

Income Summary 46,040.00
AA, Capital 13,080.00
BB, Capital 14,190.00
CC, Capital 18,770.00

To close drawings account

AA, Capital 4,476.00
BB, Capital 4,476.00
CC, Capital 4,476.00
AA, Drawings 4,476.00
BB, Drawings 4,476.00
CC, Drawings 4,476.00
 Capital Accounts
AA BB
T. Drawings 4,476.00 48,000.00 T. Drawings 4,476.00 72,000.00
12,000.00 -
13,080.00 Share in NI 14,190.00
68,604.00 81,714.00

ANSWERS:
1.      The share of partner AA in the net income 13,080.00
2.      The capital balance of partner CC on December 31, 2019104,294.00

ASSUMPTION for No. 3

Income 46,040.00
Salaries to Partners (OpEx) 20,000.00
Net Income 26,040.00

Journal Entries pertaining to Salaries

Salaries Expense 1,119.00
Cash 1,119.00
Monthly entry to record salaries collected by partners

12/31 Salaries Expense 6,572.00

Cash 6,572.00

40% 30% 30%

AA BB CC TOTAL
Allowances
1. Interest 6,480.00 8,640.00 12,420.00 27,540.00
Remainder (600.00) (450.00) (450.00) (1,500.00)
Share in Net Income 5,880.00 8,190.00 11,970.00 26,040.00

Journal Entries:
Income Summary 26,040.00
AA, Capital 5,880.00
BB, Capital 8,190.00
CC, Capital 11,970.00

Capital Accounts
AA BB
48,000.00 72,000.00
12,000.00 -
5,880.00 Share in NI 8,190.00
 65,880.00 80,190.00

ANSWERS:

3. If the salaries to partners are to be recognized as operating expense by the partnership, the share of partner BB i
4. Using the same information to No. 3, the capital balance of partner CC on December 31, 2019 is?
Ave. Mo. CC Movement Ave. Mo.
12/12 72,000.00 1/1 108,000.00 12/12 108,000.00
10/1 (18,000.00) 3/12 (4,500.00)
72,000.00 Average Capital 103,500.00
 CC
18,000.00 108,000.00
T. Drawings 4,476.00 -
Share in NI 18,770.00 Share in NI
104,294.00

CC
18,000.00 108,000.00
-
Share in NI 11,970.00 Share in NI
 101,970.00

p, the share of partner BB in the net income is? 8,190.00

101,970.00
 A B C Total

Agreed Capitalization 500,000.00 100,000.00 400,000.00 1,000,000.00

Additional Investments 200,000.00 500,000.00 - 700,000.00
Drawings - (300,000.00) (100,000.00) (400,000.00)
Share in Net Income (150,000.00) (100,000.00) (250,000.00) (500,000.00)
Balance at Year End 550,000.00 200,000.00 50,000.00 800,000.00

ANSWERS:
1.      What is the net income or net loss of ABC partnership for the year ended December 31, 2020?
2.      What is the capital balance of C on December 31, 2020?
 Capital Interest
P/L Ratio
Ratio
A 5 3
B 1 2
C 4 5

ember 31, 2020? (500,000.00)

50,000.00
Distribution of Net Income
A B C TOTAL
Interest 30,000.00 50,000.00 20,000.00 100,000.00
Salary 160,000.00 40,000.00 - 200,000.00
Bonus -
Remainder 200,000.00 200,000.00 200,000.00 600,000.00
Share in Net Income 390,000.00 290,000.00 220,000.00 900,000.00

Bonus Computation:

Bonus = x% (Net Income - Interest - Salaries)

Bonus = x% ((Net Income - Interest - Salaries) + Bonus)

X = 20%( (900,000 - 100,000 - 200,000) + X)

X = 20% ((600,000) + X)

X = 120,000 + .20X

X - .20X = 120,000

.80X = 120,000

X = 120,000 / .80

X = 150,000

A B C TOTAL
Interest 30,000.00 50,000.00 20,000.00 100,000.00
Salary 160,000.00 40,000.00 200,000.00
Bonus 150,000.00 150,000.00
Remainder 200,000.00 200,000.00 200,000.00 600,000.00
Share in Net Income 540,000.00 290,000.00 220,000.00 1,050,000.00
Capital balance of Partners
Original Contribution
Additional Investments
Withdrawals
Capital Balance B4 SNI
Share in Net Income
Capital Balance at Year End
A B C TOTAL
300,000.00 500,000.00 200,000.00 1,000,000.00
500,000.00 200,000.00 300,000.00 1,000,000.00
(200,000.00) (100,000.00) (400,000.00) (700,000.00)
600,000.00 600,000.00 100,000.00 1,300,000.00
220,000.00
320,000.00
 Harley Riven Trindamere Khufra Total
Salaries 20,000.00 10,000.00 30,000.00
Bonus 3,000.00 2,000.00 5,000.00
Interest (10%) 5,000.00 4,500.00 2,000.00 4,700.00 16,200.00
Balance (equally) 13,450.00 13,450.00 13,450.00 13,450.00 53,800.00
Total 41,450.00 29,950.00 15,450.00 18,150.00 105,000.00

Bonus:
B = (3% + 2%) ( NI - B)
B = 5% (105,000 - B)
B = 5,250 - .05B
1.05B = 5,250

B = 5,000