E - Z Manufacturing Company is a partnership among yolanda gonzales, willie todd

Question

E   -    Z     Manufacturing Company is a partnership among yolanda gonzales, willie todd and linda yeager. The partnership contract states that partnership profits will be split equally among the three partners. During the current year gonzales withdrew $25,000, todd withdrew $23,000, and yeager withdrew $30,000. Net income of e-z manufacturing company amounted to $180,000.

A. Calculate each partner's share of net income for the period.

B. Describe the effects, if any, that the partnership operations would hae on the individual tax returns of the partners.

C. Prepare a statement of partner's equity for the year. Assume that partner's capital accounts had a beginning balances of $50,000, $60,000 and $40,000 for gonzales, todd and yeager, respectively. Hide problem

Explanation / Answer

A.
Gonzales Todd Yeager Total
Net Income to be divided $180,000
Less: Drawing 25000 23000 30000= 78000
$102,000

Allocated in fixed ratio (33.3%): 34000 34000 34000= 102000
$68,000 $68,000 $68,000 = $(102,000)



B.
Gonzales Todd Yeager Total
Balance for Jan. 2008 $50,000 $60,000 $40,000 = $150,000
Net Income for the year 30000 30000 30000 = 90000
Subtotals: $80,000 $90,000 $70,000 = $240,000

Less: Drawings 25000 23000 30000 = 78000
Balance for Dec. 2008 $55,000 $67,000 $40,000 = $162,000

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