Bangayan, Melody D. Assignment 2( Partnership Operations) PDF

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BANGAYAN, MELODY D.

PROF. MICHAEL GATCHALIAN

ACCTG 028- ACTCY31S1

December 8, 2020

ASSIGNMENT #2 Partnership Operations

The partnership agreement of Jones, King, and Lane provides for the annual allocation of the business’s profit or loss in the following sequence: • Jones, the managing partner, receives a bonus equal to 20 percent of the business’s profit. • Each partner receives 15 percent interest on average capital investment. • Any residual profit or loss is divided equally. The average capital investments for 2011 were as follows: Jones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $100,000 King . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000 Lane . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000 Purkerson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000 Smith . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000 Traynor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000

How much of the $90,000 partnership profit for 2011 should be assigned to each partner?

Profit

$90,000 X 20%

BONUS

18,000

INTEREST

Jones

$100,000 x 15% = 15,000

King

200,000 x 15% = 30,000

Lane

300,000 x 15% = 45,000

Purkerson

60,000 x 15% = 9,000

Smith

40,000 x 15% = 6,000

Traynor

20,000 x 15% = 3,000

JONES

KING

BONUS (20%)

18,000

INTEREST

15,000

30,000

REMAINDER (LOSS)

(6,000)

TOTAL

27,000

LANE

PURKERSON

SMITH

TRAYNOR

TOTAL

18,000

45,000

9,000

6,000

3,000

108,000

(6,000) (6,000)

(6,000)

(6,000)

(6,000)

(36,000)

24,000 39,000

3,000

0

(3,000)

90,000...