Accounting homework help. Freddie, Jason and Zombie are partners in the Happy El
ID: 2585967 • Letter: A
Question
Accounting homework help.
Freddie, Jason and Zombie are partners in the Happy Elm Street Hocky Mask partnership Information about the partnership is as follows 1-Jan-16 Freddie capital Jason capital Zombie capital S300,000 $400,000 $100,000 Freddie is a 50% partner; Jason is a 20% partner and Zombie is a 30% partner Freddie gets a $10,000 salary; Zombie gets a $25,000 salary Freddie withdraws $2000 each month for pedicures. Zombie withdraws his salary each year Partners get 10% interest on their beginning capital balance Below are the partial income statements for 2016, 2017 and 2018 2016 400,000 180,000 2017 500,000 230,000 2018 600,000 580,000 sales cost of goods sold REQUIRED; FOR 2016, 2017 AND 2018 DETERMINE A) THE INCOME ALLOCATED TO EACH PARNTER B) THE DECEMBER 31 CAPITAL BALANCE FOR EACH PARTNERExplanation / Answer
Allocation of net income 2016 Freddie Jason Zombie Total Salary Allowance $10,000 0 $25,000 $35,000 Interest( 10% of beginning capital a/c bal) 30000 40000 10000 80000 Total $40,000 $40,000 $35,000 $115,000 Remainder ( 50%, 20%, 30% ) -5000 -2000 -3000 -10000 Net Income $35,000 $38,000 $32,000 $105,000 2017 Freddie Jason Zombie Total Salary Allowance $10,000 0 $25,000 $35,000 Interest( 10% of beginning capital a/c bal) 35100 47800 14200 97100 Total $45,100 $47,800 $39,200 $132,100 Remainder ( 50%, 20%, 30% ) 2900 1160 $1,740 $5,800 Net Income $48,000 $48,960 $40,940 $137,900 2018 Freddie Jason Zombie Total Salary Allowance $10,000 0 $25,000 $35,000 Interest( 10% of beginning capital a/c bal) 0 0 0 0 Total $10,000 $0 $25,000 $35,000 Remainder ( 50%, 20%, 30% ) -25000 -10000 -15000 -50000 Net Income -15000 -10000 10000 -15000 Answer to part B Freddie Jason Zombie Total Balance as at 1 Jan 2016 $300,000 $400,000 $100,000 $800,000 Interest on capital 30000 40000 10000 80000 Salary 10000 0 25000 35000 Profit share 35000 38000 32000 105000 Drawings 24000 0 25000 49000 Balance as at 31 Dec $351,000 $478,000 $142,000 $971,000 Freddie Jason Zombie Total Balance as at 1 Jan 2017 $351,000 $478,000 $142,000 $971,000 Interest on capital 35100 47800 14200 97100 Salary 10000 0 25000 35000 Profit share 48000 48960 40940 137900 Drawings 24000 0 25000 49000 Balance as at 31 Dec $420,100 $574,760 $197,140 $1,192,000 Freddie Jason Zombie Total Balance as at 1 Jan 2018 $420,100 $574,760 $197,140 $1,192,000 Interest on capital 0 0 0 0 Salary 10000 0 25000 35000 Profit/Loss share -15000 -10000 10000 -15000 Drawings 24000 0 25000 49000 Balance as at 31 Dec $391,100 $564,760 $207,140 $1,163,000 W. Note : Calculation of net income Particulars 2016 2017 2018 Sales 400000 500000 600000 Less : COGS 180000 230000 580000 Gross Profit 220000 270000 20000 Less : Salary ($10000+ $25000) 35000 35000 35000 Less : Interest ($ 300000 + 400000 + 100000)x 10% 80000 ($351000 + 478000 + 142000 )x 10% 97100 No interest on capital is allowed in case of loss 0 Net Income 105000 137900 -15000