Reference no: EM132820659
Larry, Garry and Barry are partners in a firm sharing profits and losses in the ratio of 5:3:2. The following information is given to you for the year ending December 31, 2020.
Net sales revenue $900,000
Cost of Goods sold 300,000
Administrative expenses 200,000
Marketing expenses 100,000
Additional information is as follows:
a. Partners capitals at the beginning of the year amounted to $60,000; $40,000 and $30,000 for Larry, Garry and Barry respectively.
b. Larry and Barry are to receive a salary of $1,200 per month and Garry is to receive a bonus of 2% on sales.
c. The partners are to receive an interest on their beginning capital balances @ 8% per annum.
d. The partners withdrew $1,000 per month.
Required:
Problem A. Show the distribution of income between the partners for the year.
Problem B. Determine the capital account balance of the partners at the end of the year.