Information about partnership

Assignment Help Accounting Basics

Reference no: EM1364653

Net Income for Levin-Tom partnership for 2012 was 125000. Levin and Tom have agreed to distribute partership net income according to the following plan.

Levin Tom

Interest on average capital balances 7% 7%

Bonus on the net income b4 the bonus

but after interest 12%

salaries 40,000 50,000

residual (if positive ) 60% 40%

residual( if negative) 50% 50%

Add info:

1. Levin began the year with a capital balance 75,000

2. Tom began the year with a capital balance 100,000

3. on March 1, Levin invested an additiona; 25,000 into partnership

4. On October 1,Tom invested an additional 20,000 into the partnership

5. throughout the yar of 2012, each partner withdrew 200 per week in anticipation of partnership net income. The partners agreed that these withdrawals are not to be included in the computation of average capital balances for purposes of income distributions

a. Prepare a schedule that discloses the distribution of partnership net income for 2012. Show supporting computations in good form.

b. Prepare the statement of partner s capital at december 31 2012

c. How would your answer to part a change if all of the provisions of the income distribution plan were the same except that the salaries were 45,000 to Levin and 60,000 to Tom?

Reference no: EM1364653

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