E15-3. Jones, Silva, and Thompson form a partnership and agree to allocate incom
ID: 2424503 • Letter: E
Question
E15-3. Jones, Silva, and Thompson form a partnership and agree to allocate income equally after recognition of 10% interest on beginning capital balances and monthly salary allowances of $2,000 to Jones and $1,500 to Thompson. Capital balances on January 1 were as follows:
Jones $40,000
Silva 25,000
Thompson 30,000
Required:
Calculate the net income (loss) allocation to each partner under each of the following independent situations.
1. Net income for the year is $99,500.
2. Net income for the year is $38,300.
3. Net loss for the year is $15,100.
Explanation / Answer
a) Interest on Capital :
Jones = 40000*10% = 4000
Silva = 25000*10% = 2500
Thompson = 30000 *10% = 3000
Salry to Jones = 2000*12 = 24000
Salary to silva = 1500*12 = 18000
Profit after salary and interest = 99500 - 51500 = 48000
Total Remuneration :
Jones = 24000+ 4000 + 16000 = 44000
Silva = 2500+18000 +16000 = 36500
Thompson = 3000 +16000 = 41000
b)
Interest on Capital :
Jones = 40000*10% = 4000
Silva = 25000*10% = 2500
Thompson = 30000 *10% = 3000
Salry to Jones = 2000*12 = 24000
Salary to silva = 1500*12 = 18000
Profit after salary and interest = 38300 - 51500 = (13300)
Total Remuneration :
Jones = 24000+ 4000 - 4433 = 23567
Silva = 2500+18000 - 4433 = 16567
Thompson = 3000 - 4433 = -1433
c)
Interest on Capital :
Jones = 40000*10% = 4000
Silva = 25000*10% = 2500
Thompson = 30000 *10% = 3000
Salry to Jones = 2000*12 = 24000
Salary to silva = 1500*12 = 18000
Profit after salary and interest = -15100 - 51500 = -66600
Total Remuneration :
Jones = 24000+ 4000 - 22200 = 5800
Silva = 2500+18000 - 22200 = -1700
Thompson = 3000 - 22200 = -19200
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