Question

Weygandt, Accounting Principles, 13e Principles of Accounting 13 (ACC 171-18 CALCULATOR STANDARD VIEW PRINTER VERSION Exercise 12-04 a b (Video) McGill and Smyth have capital balances on January 1 of $46,000 and $38,000, respectively. The partnership income-sharing agreement provides for (1) annual salaries of $25,000 for McGill and $20,000 for Smyth, (2) interest at 10% on beginning capital balances, and (3) remaining income or loss to be shared 70% by Mccall and 30% by Smyth, Prepare a schedule showing the distribution of net income, assuming net income is $79.000. (If an amount reduces the account balance then enter with a negative in preceding the number parenthesis, 15. (15,000)..) DIVISION OF NET INCOME Smyth Salary allowance Interest allowance Total salaries and interest Remaining income dicen Total division of net income (2) net income 121.000. a m et duces the balance the enter with a negative con the munberor Prepare a schedule showing the distribution of net income as parenthews 15.000 (1.000).) DIVISION OF NET INCOME Show all 200PM to search De ô a

Answer 1

Solution 1:

Schedule of Divison of income
Particulars	McGill	Smyth	Total
Salary Allowance	$25,000.00	$20,000.00	$45,000.00
Interest Allowance McGill - ($46,000*10%) Smyth - ($38,000*10%)	$4,600.00	$3,800.00	$8,400.00
Total salary and interest	$29,600.00	$23,800.00	$53,400.00
Remaining income / deficiency (7:3)	$17,920.00	$7,680.00	$25,600.00
Total division of net income	$47,520.00	$31,480.00	$79,000.00

Solution 2:

Schedule of Divison of income
Particulars	McGill	Smyth	Total
Salary Allowance	$25,000.00	$20,000.00	$45,000.00
Interest Allowance McGill - ($46,000*10%) Smyth - ($38,000*10%)	$4,600.00	$3,800.00	$8,400.00
Total salary and interest	$29,600.00	$23,800.00	$53,400.00
Remaining income / deficiency (7:3)	-$22,680.00	-$9,720.00	-$32,400.00
Total division of net income	$6,920.00	$14,080.00	$21,000.00

Solution 3:

Journal Entries
Event	Particulars	Debit	Credit
1	Income Summary Dr	$79,000.00
	To McGill's capital		$47,520.00
	To Smyth's capital		$31,480.00
	(Being Net income distributed among partners)
2	Income Summary Dr	$21,000.00
	To McGill's capital		$6,920.00
	To Smyth's capital		$14,080.00
	(Being Net income distributed among partners)