Asked by Chris Huynh on May 08, 2024
Verified
The partnership of Smith and Jones, who have average capital balances of $17,000 and $23,000, respectively, earned $90,000 net income. Under each of the following independent situations, calculate the distribution of the $90,000.
a) No agreement was established.
b) Share based on their average capital balances.
Capital Balances
The amount of money that owners have invested in a company plus any retained earnings or minus any losses.
Net Income
Net Income is the profit of a company after all expenses, taxes, and costs have been subtracted from total revenue.
- Calculate the distribution of net income under different partnership agreements.
Verified Answer
TL
Tuan Lam Luong VuMay 15, 2024
Final Answer :
a) Smith, $45,000; Jones, $45,000
b) Smith, $38,250; Jones, $51,750
b) Smith, $38,250; Jones, $51,750
Learning Objectives
- Calculate the distribution of net income under different partnership agreements.
Related questions
Emerson and Dakota Formed a Partnership Dividing Income as Follows ...
Carraway and Boos Have a Partnership Agreement Which Includes the ...
Juanita Gomez and Brandi Toomey Have Formed the GT Partnership ...
Ando Dadd and Porter Formed a Partnership on January 1 ...
The Adjusted Trial Balance of the Ricci and Napoli Partnership ...