FROTO, BILBO AND GANDOFF ARE THE 3 PARTNERS IN THE LAW FIRM OF FBG. INFORMATION
ID: 2456034 • Letter: F
Question
FROTO, BILBO AND GANDOFF ARE THE 3 PARTNERS IN THE LAW FIRM OF FBG. INFORMATION ABOUT THE PARTNERSHIP IS AS FOLLOWS:
FROTO: 50% PARTNER, CAPITAL ACCOUNT JANUARY 1, 2015 $50,000 RECEIVES SALARY OF $40,000
BILBO: 20% PARTNER, CAPITAL ACCOUNT JANUARY 1, 2015 $70,000 RECEIVES SALARY OF $20,000
GANDOFF: 30% PARTNER, CAPITAL ACCOUNT JANUARY 1, 2015 $111,000 RECEIVES NO SALARY
The partnership pays interest of 12% on January 1, capital account. In addition to her salary, Froto takes $500 out of her capital account monthly. Gandoff takes $1000 out of his capital account each month.
Income before partner salaries or interest on capital is as follows:
2015 $225,000
2016 $400,000
2017 $333,000
REQUIRED: FOR 2015, 2016 AND 2017 DETERMINE
A) THE AMOUNT OF THE PARTNERSHIP INCOME ALLOCATED TO EACH PARTNER
B) THE CAPITAL ACCOUNT BALANCE FOR EACH PARTNER ON DECEMBER 31, 2015, 2016 AND 2017.
Explanation / Answer
REQUIRED:
A) PARTNERSHIP INCOME ALLOCATED:
B) THE CAPITAL ACCOUNT BALANCE ON :
year /date particulars FROTO BILBO GANDOFF TOTAL 2015, JAN1 OPENING BALANCE 50000 70000 111000 WITHDRAWALS (6000) (12000) 2015 DEC 31 CLOSING BALANCE 44000 70000 99000 2016 JAN1 OPENING BALANCE 44000 70000 99000 INTEREST 5280 8400 11880 2016 JAN1 INCOME ALLOCATED 69720 27888 41832 139440 WITHDRAWALS (6000) (12000) 2016 DEC 31 CLOSING BALANCE 113000 106288 140712 2017 JAN1 OPENING BALANCE 113000 106288 140712 INTEREST 13560 12755 16886 2017 JAN1 INCOME ALLOCATED 148400 59360 89039 296799 WITHDRAWALS (6000) (12000) 2017 DEC 31 CLOSING BALANCE 268960 178403 246637 2018 JAN1 OPENING BALANCE 268960 178403 246637 INTEREST 32275 21408 28157 2018 JAN1 INCOME ALLOCATED 95580 38232 57348 191160Related Questions
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