11 ..Norr and Caylor established a partnership on January 12016. Norr invested c

Question

11 ..Norr and Caylor established a partnership on January 12016. Norr invested cash of $187,000 0 and fair value of $60,000. For both partners, the beginning capital balance was to equal the initial investment. Nori and Caylor agreed to the following procedure for sharing profits and losses: -12% interest on the yearly beginning capital balance -$10 per hour of work that can be billed to the partnership's clients - the remainder divided in a 3:2 ratio The Articles of Partnership specified that each partner should withdraw no more than $1,000 per month. For 2016, the partnership's income was $45,000. Norr had 1,200 billable hours, and Caylor worked 1,600 billable hours. Each partner withdrew $1,000 per month throughout 2016. a. Determine the amount of net income allocated to each partner for 2016. (3 pts) b. Determine the ending capital balances for each partner for 2016. (3 pts) Page 10 of 13

Explanation / Answer

a.

Opening capital:

profit/loss distribution:

net income to norr= 18420+12000-11904= 18516

net income to caylor= 18420+16000-7936= 26484

capital balance

Norr= 160016

caylor= 167984

Net assets contribution: Norr Total Cash        1,87,000        1,87,000 Caylor Cash            60,000 Equipment            60,000        1,20,000 Total assets        3,07,000 Total assets shared equally, hence Share of Norr        1,53,500 Caylor        1,53,500 Total        3,07,000

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