6 Marks Question ss, by Jensen and Stafford began a partnership to start a hardw

Question

6 Marks Question ss, by Jensen and Stafford began a partnership to start a hardwood flooring installation busin investing $160,000 and $200,000, respectively. They agreed to share profits/os) by prov yearly salary allowances of $150,000 to Jensen and $75,000 to Stafford, 20% interest allowa on their investments, and sharing the balance 32 nce 1. Determine each partner's share if the first-year profit was $420,000. 2. Independent of (1), determine each partner's share if the first-year loss was $95,000 Question 2 6 Marks Conway, Kip, and Zack are partners of Force, a local cross-fit training facility with capital balances as follows: Conway, $367,200; Kip, $122,400; and Zack, $244,800. The partners share profit and losses in a 1:2:1 ratio. Young is admitted to the partnership on November 30 with 20% equity Prepare general journal entries to record the entry of Young under each of the following unrelated assumptions: a. Young invests $183,600. b. Young invests $129,600. c. Young invests $295,200.

Explanation / Answer

Q1. Profit of 420000 Statemente showing Allocation of profits Jensen Stafford Total Net income for the year 420000 Salary of partners 150000 75000 -225,000 Remaining income 195000 Interest on capital @20% 32000 40000 -72000 Remaining income 123,000 Share of Profits in 3:2 73800 49200 -123,000 Total Shares 255800 164200 0 Loss of ($95000) Statement showing Allocation of profits: Jensen Stafford Total Net loss of the year -95,000 Salary of partners 150000 75000 -225,000.00 Remaining Income -320000 Interest on capital @20% 32000 40000 -72000 Remaining Income -392000 Share of loss in 3:2 -235200 -156800 392000 Total share -53200 -41800 0

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