Greetings. I need someone helping me with the following problem: The partnership

Question

Greetings. I need someone helping me with the following problem:

The partnership of Jill and John has the following provisions:

Jill and John receive salary allowances of $30,000 and $20,000, respectively.

Interest is imputed at 10% on the average capital investment. Any remaining profit or loss is shared between Jill and John in a 4:1 ratio, respectively.

Average Capital investments: Jill, $ 60,000; John, $120,000

A. Prepare a schedule showing the division of how the profit and/or loss would be divided assuming the partnership has a profit of $110,000 assuming no limitations exist. Include the journal entry to record the allocation of profit.

B. Prepare a schedule showing the division of how the profit and/or loss would be divided assuming the partnership has a loss of $30,000 assuming no limitations exist. Include the journal entry to record the allocation of loss.

C. Prepare a schedule showing the division of how the profit and/or loss would be divided assuming the partnership has a profit of $58,000 assuming the partnership stipulates the following order of priority:

1. Salary Allowances only to the extent available

2. Imputed Interest on average capital investments only to the extent available

3. Any remaining profit in a 4:1 ratio

Be sure to include the journal entry to record the allocation of the profit.

Thank you!

Explanation / Answer

journal entry

Schedule

B

Schedule

Journal entry :

(3)Schedule

Journal entry

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