Determine the allocation of income at the end of year

Reference no: EM131962020

Problem

The Prince-Robbins partnership has the following capital account balances on January 1, 2015:

Prince, Capital $ 70,000
Robbins, Capital 60,000

Prince is allocated 80 percent of all profits and losses with the remaining 20 percent assigned to Robbins after interest of 10 percent is given to each partner based on beginning capital balances.

On January 2, 2015, Jeffrey invests $37,000 cash for a 20 percent interest in the partnership. This transaction is recorded by the goodwill method. After this transaction, 10 percent interest is still to go to each partner. Profits and losses will then be split as follows: Prince (50%), Robbins (30%), and Jeffrey (20%). In 2015, the partnership reports a net income of $15,000.

Determine the allocation of income at the end of 2015.

Reference no: EM131962020

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