C. Eastwood, A. North, and M. West are manufacturers representatives in the arch

Question

C. Eastwood, A. North, and M. West are manufacturers representatives in the architecture business. Their capital accounts in the ENW partnership for 20X1 were as follows C. Eastwood, Capital 9,100 31,400 6,100 A. North, Capital 41,000 5,400 5,400 10,000 M. West, Capital 51,400 8,700 4,900 12,800 Required For each of the following independent income-sharing agreements, prepare an income distribution schedule. a. Salaries are $16,400 to Eastwood, $21,300 to North, and $18,800 to West. Eastwood receives a bonus of 5 percent of net income after deducting his bonus. Interest is 10 percent of ending capital balances. Eastwood, North, and West divide any remainder in a 3:3:4 ratio, respectively. Net income was $78,750. (Amounts that are to be deducted from an individual partner's capital balance should be entered with a minus sign.)

Explanation / Answer

a)

Eastwood North West Total Profit Ratio 0.3 0.3 0.4 1 Ending capital 28400 41800 52200 Net Income 78750 Salary 16400 21300 18800 56500 Bonus 3750 0 0 3750 Interest on ending capital balance 2840 4180 5220 12240 Residual Income (Deficit) 6260 Allocate 1878 1878 2504 Total 53268 69158 78724

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