Please show all workings 93 Weighted average capital balance During year 2, 2017

Question

Please show all workings 93 Weighted average capital balance During year 2, 2017-the following T accounts show the activity in the partner's Capital and Withdrawal accounts: On May 1, 2017 - HH withdrew $45,000 and JR withdrew $25,000 HH Capital JR Capital 1/1/2017 216.540 124.460 R Drawings 25,000 HH Drawing 1-May 45,000 HH's additional capital contributions during the year is as follows: Date Contribution 3/31/2017 $16,000 7/1/2017 12,000 11/30/2017 24,000 JR's additional capital contributions during the year is as follows: Date Contribution 4/1/2017 12,000 9/1/2017 $ 12,000 11/30/2017 24,000 Assume the partnership agreement states that profits and losses will be distributed as follows: 1. JR will receive an annual salary of $30,000. 2. Each partner receives a 20% interest on their weighted average capital balances 3.JR gets a bonus of 15% on net income over $50,000 4. HH and JR share remaining profits and losses equally (50:50) 1. Calculate the weighted average capital balance for each partner 2. Calculate the distribution of the income or loss generated under the following assumptions: a) The partnership had a net income of $150,000 at the end of 2017. b) The partnership had a net income of $75,000 at the end of 2017 a) The partnership had a net loss of $20,000 at the end of 2017. d) Prepare the closing entries for both capital and withdrawal accounts as of Dec. 31, 2017

Explanation / Answer

HH capital Date Bal Addition Bal after addition/(drawing) No. of months Wgt Avg Opening bal 216540 0 216540 3/12 54135 3/31/2017 216540 16000 232540 1/12 19378 5/1/2017 232540 -45000 187540 2/12 31257 7/1/2017 187540 12000 199540 5/12 83142 11/30/2017 199540 24000 223540 1/12 18628 Total 206540 JR capital Date Bal Addition Bal after addition/(drawing) No. of months Wgt Avg Opening bal 124460 0 124460 3/12 31115 4/1/2017 124460 12000 136460 1/12 11372 5/1/2017 136460 -25000 111460 4/12 37153 9/1/2017 111460 12000 123460 3/12 30865 11/30/2017 123460 24000 147460 1/12 12288 Total 122793 Ans 1 Weighted avg capital balance W HH JR 206540 122793 ans 2 a) Net income is 150000 HH JR Bal 150000 Salary 30000 120000 Int (20%*W) 41308 24559 54133 Bonus (15%*100000) 15000 39133 Remaiming equally 19567 19567 0 Total 60874.67 89125.33 rounded off 60875 89125 b) b) Net income is 75000 HH JR Bal 75000 Salary 30000 45000 Int (20%*W) 41308 24559 -20867 Bonus (15%*25000) 3750 -24617 Remaiming equally -12308 -12308 0 Total 29000 46000 rounded off 29000 46000 bc) Net income is 20000 HH JR Bal 20000 Salary 30000 -10000 Int (20%*W) 12174.93 17825 -40000 Bonus 0 -40000 Remaiming equally -20000 -20000 0 Total -7825 27825 rounded off -7825 27825 d) Closing entries HH Capital 45000 HH drawings 45000 JR capital 25000 JJ Drawings 25000

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.