FROTO, BILBO AND GANDOFF ARE THE 3 PARTNERS IN THE LAW FIRM OF FBG. INFORMATION
ID: 2454038 • Letter: F
Question
FROTO, BILBO AND GANDOFF ARE THE 3 PARTNERS IN THE LAW FIRM OF FBG. INFORMATION ABOUT THE PARTNERSHIP IS AS FOLLOWS:
FROTO: 50% PARTNER, CAPITAL ACCOUNT JANUARY 1, 2015 $50,000 RECEIVES SALARY OF $40,000
BILBO: 20% PARTNER, CAPITAL ACCOUNT JANUARY 1, 2015 $70,000 RECEIVES SALARY OF $20,000
GANDOFF: 30% PARTNER, CAPITAL ACCOUNT JANUARY 1, 2015 $111,000 RECEIVES NO SALARY
The partnership pays interest of 12% on January 1, capital account. In addition to her salary, Froto takes $500 out of her capital account monthly. Gandoff takes $1000 out of his capital account each month.
Income before partner salaries or interest on capital is as follows:
2015 $225,000
2016 $400,000
2017 $333,000
REQUIRED: FOR 2015, 2016 AND 2017 DETERMINE
THE AMOUNT OF THE PARTNERSHIP INCOME ALLOCATED TO EACH PARTNER
THE CAPITAL ACCOUNT BALANCE FOR EACH PARTNER ON DECEMBER 31, 2015, 2016 AND 2017
Explanation / Answer
Answer:
THE CAPITAL ACCOUNT BALANCE FOR EACH PARTNER ON DECEMBER 31, 2015, 2016 AND 2017:
Particulars 2015 2016 2017 Income before partner salaries or interest on capital 225000 400000 333000 Less: Salaries FROTO 40000 40000 40000 BILBO 20000 20000 20000 GANDOFF 0 0 0 Less: Interest FROTO 6000 19036.8 42647.62 BILBO 8400 15102.72 26213.61 GANDOFF 13320 18420.48 29538.78 Remaining income 137280 287440 174600 Allocation to each partner FROTO (50%) 68640 143720 87300 BILBO (20%) 27456 57488 34920 GANDOFF (30%) 41184 86232 52380Related Questions
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