Distribution of Partnership Income During the first year, the Bob and Kim partne
ID: 2362694 • Letter: D
Question
Distribution of Partnership Income
During the first year, the Bob and Kim partnership in SE 2
earned an income of $5,000. Assume the partners agreed to share income and
losses by figuring interest on the beginning capital balances at 10 percent, allowing
a salary of $6,000 to Bob, and dividing the remainder equally. How much income
(or loss) should be transferred to each Capital account?
I have completed SE 2 just in case you need it to answer this question I have posted it below along with my answer:
SE 2. Bob contributes cash of $12,000, and Kim contributes office
equipment that cost $10,000 but is valued at $8,000 to the formation of a new
partnership. Prepare the entry in journal form to form the partnership.
Answer:
Dr Cr
Cash 12,000
Office Equipment 8,000
Bob, Capital 12,000
Kim, Capital 8,000
Explanation / Answer
Bob earns 10% of 12,000 or $1,200 Kim earns 10% of 8,000 or $800 That leaves $800 + $1,200 = $2,000... $5,000 - $2,000 = $3,000 to be shared equally or $1,500 each So Bob get's $2,700 and Kim gets $2,300