Net income allocation is to be based on interest-salaries

Assignment Help Financial Accounting

Reference no: EM131216322

Breeden, Myers, and Kowski are partners operating a business under the name of Professional Business Services. They are considering several ways to share the $24,000 net income earned from the first year's operations. Interest allowances on capital balances, if allowed, would be at the rate of 5%. Salaries would be $6,000 each for Breeden and Myers and $8,000 for Kowski. The partners agree that if ratios are to be used as a basis for allocating all or a part of the net income, the ratio should be 3:3:4 for Breeden, Myers, and Kowski respectively. The weighted average capital balances of the partners for the year are respectively $12,000, $13,000, and $5,000.

1. If the net income allocation is to be based on interest, salaries, and ratios, Myers will be allocated A. $7,200. B. $7,400. c. $7,650. D. $7,800.

2. If the net income is to be allocated solely on basis of salaries and ratios, Kowski will be allocated A. $8,000. B. $9,600. c. $10,000. D. $10,250.

3. Assuming a net income of $14,000 instead of$24,000, what· portion of the net income will be allocated to Breeden if the allocation is based on salaries and ratios and the salary allowances are changed to $6,000, $7,000, and $8,000 for Breeden, Myers, and Kowski respectively? A. $7,200 c. $3,900 B. $6,000 D. $2,100 deficit

Reference no: EM131216322

Questions Cloud

Prepare an income statement for the month of july 2016 : Prepare a combined schedule of cost of good manufactured and cost of sold statement for the month of July 2016. Show computations pertaining to the missing values for raw materials and WIP control accounts - Prepare an income statement for the mont..

Convergence in the ms sense : Show by counterexample that convergence almost everywhere does not imply convergence in the MS sense.- Show by counterexample that convergence in the MS sense does not imply convergence almost everywhere.

Record the transactions in the relevant journals : Assignment - Journals, Ledger and Trial Balance. Record the transactions in the relevant journals. Post to respective ledger and sub-ledger accounts

Explain the major challenges you would face in running : Discuss the major challenges you would face in running such a business and how you would expect to overcome them. Provide specific examples to support your response.

Net income allocation is to be based on interest-salaries : Breeden, Myers, and Kowski are partners operating a business under the name of Professional Business Services. They are considering several ways to share the $24,000 net income earned from the first year's operations. If the net income allocation is ..

Provide example of change in labor force participation rates : Locate and incorporate outside research that gives evidence and explanation as to the possible causes of this decline. Provide an example of the changes in labor force participation rates over the last decade.

Which forms of convergence apply to random sequence : Consider the random sequence. - where is a Cauchy random variable with PDF,- Determine which forms of convergence apply to this random sequence.

Discuss single most important lesson any entrepreneur apply : Reflecting back on everything you have learned in this course, discuss the single most important lesson any entrepreneur should apply in order to be successful. Explain your rationale.

Describe how sleep deprivation impacts your ability to learn : Your roommate has been coming back to the dorm at all hours of the night, disrupting your sleep. Describe a typical night's sleep cycle and then describe how your sleep deprivation impacts your ability to learn and your health.

User Account

All Pages