Hi, will appreciate any help with this one! thank you! S12-4 Allocating profits

Question

Hi, will appreciate any help with this one! thank you!

S12-4 Allocating profits and losses to the partners Stone and Smith had beginning capital balances of $18,000 and $13,000,re The two partners fail to agree on a profit-and-loss-sharing ratio. For the first month June 2018), the partnership has a net loss of $9,000. Requirements 1. How much of this loss goes to Stone? How much goes to Smith? 2. The partners withdrew no assets during June. What is each partner's capital balan at June 30? Prepare a T-account for each partner's capital account.

Explanation / Answer

Req 1. In the absence of deed in regard to sharing ratio, the profits or loss of the firm will be allocated among partners equally. Therefore, share of loss of partners is as under: Stone Share of loss = 9000*1/2 = 4500 Smith Share of loss = 9000*1/2 = 4500 Req 2. Capital Balances at the end: Stone Smith Beginning Balance of capital 18000 13000 Less: Share of loss -4500 -4500 Ending balance of capital 13500 8500 Stone Capital Account Income Summary 4,500 Balance 18,000 Balance ending 13500 Smith Capital Account Income Summary 4,500 Balance 13,000 Ending balance 8500

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