Ask Question
8 February, 19:13

Exercise 12-04 a-b (Video) McGill and Smyth have capital balances on January 1 of $54,000 and $48,000, respectively. The partnership income-sharing agreement provides for (1) annual salaries of $19,000 for McGill and $14,000 for Smyth, (2) interest at 10% on beginning capital balances, and (3) remaining income or loss to be shared 70% by McGill and 30% by Smyth.

+4
Answers (1)
  1. 8 February, 21:40
    0
    Question Continuation

    Complete the schedule showing the distribution of net income, assuming net income is $54,000

    Answer:

    McGill takes $31,540

    Smyth takes $22,460

    Total: $54,000

    Explanation:

    Salary Allowance

    McGill: $19,000

    Smyth: $14,000

    Total Salary Allowance = $33,000

    Interest Allowance

    McGill: $54,000 x 10% = $5,400

    Smyth: $48,000 x 10% = $4,800

    Total Interest Allowance = $5400 + $4,800 = $10,200

    Total salaries and interest

    McGill = $24,400 ($19,000 + $5,400)

    Smyth: $18,800 ($14,000 + $4,800)

    Sum = $43,200

    Remaining income

    McGill = $10,200 x 70% = $7,140

    Smyth: $10,200 x 30% = $3,060

    Total division between McGill and Smyth

    McGill takes $31,540

    Smyth takes $22,460

    Total: $54,000
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Exercise 12-04 a-b (Video) McGill and Smyth have capital balances on January 1 of $54,000 and $48,000, respectively. The partnership ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers