Rex baker and ty farney are forming a partnership to which

Assignment Help Financial Accounting

Reference no: EM13376827

Rex Baker and Ty Farney are forming a partnership to which Baker will devote three-fourth time and Farney will devote full time. They have discussed the following alternative plans for sharing income and loss:

(a) in the ratio of their initial capital investments, which they have agreed will be $32,000 for Baker and $48,000 for Farney;

(b) in proportion to the time devoted to the business;

(c) a salary allowance of $2,250 per month to Farney and the balance in accordance with the ratio of their initial capital investments; or

(d) a salary allowance of $2,250 per month to Farney, 10% interest on their initial capital investments, and the balance shared equally.

The partners expect the business to perform as follows: year 1, $14,000 net loss; year 2, $35,000 net income; and year 3, $58,333 net income.

Year 1
Income (Loss)
-----------------------

Sharing Plan Baker Farney
(a) $ $
(b) $ $
(c) $ $
(d) $ $
--------------------------------------------------------------------------------
Year 2
Income (Loss)
--------------------------------------------------------------------------------
Sharing Plan Baker Farney
(a) $ $
(b) $ $
(c) $ $
(d) $ $
--------------------------------------------------------------------------------
Year 3
Income (Loss)
--------------------------------------------------------------------------------
Sharing Plan Baker Farney
(a) $ $
(b) $ $
(c) $ $
(d) $ $

Reference no: EM13376827

Questions Cloud

Your client holds the long leasehold interest in the : your client holds the long leasehold interest in the surveyor and clipboard a restaurant which is on the fringe of a

Students should review the following statements and write : students should review the following statements and write 3paragraphs that provide support for your answers1.managers

Conwell company manufactures its product vitadrink through : conwell company manufactures its product vitadrink through two manufacturing processes mixing and packaging. all

Pass through agencies and gasb investment reportingsubmit : pass through agencies and gasb investment reportingsubmit your responses to the following questions in a 1-2 page

Rex baker and ty farney are forming a partnership to which : rex baker and ty farney are forming a partnership to which baker will devote three-fourth time and farney will devote

Why should related party transaction be disclosed for a : why should related party transaction be disclosed for a nonprofit organization arent we all working towards the common

Your cfo in her initial work needs to decide whether to set : your cfo in her initial work needs to decide whether to set up a job order costing system or a process type costing

1 what is a highly compensated employee2 what effect does a : 1. what is a highly compensated employee?2. what effect does a highly compensated employee have on the minimum vesting

1how are general long-term liabilities distinguished from : 1.how are general long-term liabilities distinguished from other long-term liabilities of the government? how does the

User Account

All Pages