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Question
Summers and Winters formed a partnership on January 1, 2012. Summers contributed $90,000 cash and equipment with a market value of $60,000. Winters' investment consisted of: cash, $30,000; inventory, $20,000; all at market values. Partnership net income for 2013 and 2012 was $75,000 and $120,000, respectively.
Determine each partner's share of the net income for each year, assuming each of the following independent situations:
a. Income is divided based on the partners' failure to sign an agreement.
b. Income is divided based on a 2:1 ratio (Summers: Winters).
c. Income is divided based on the ratio of the partners' original capital investments.
d. Income is divided based on partners allowed 12% of the original capital investments, with salaries to Summers of $30,000 and Winters of $25,000 and the remainder to be divided equally.
Prepare the journal entry to record the allocation of the 2013 income under alternative (d) above.
Answer
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Related questions
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Periods
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