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What will be total amount credited to marys capital account

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Reference no: EM132315419

Question

Hello- You can't seem to find text that helps you understand what residual profit is as it relates to partnerships. You understand that it is the profits that are earned and remain after all taxes and debt are paid. Can you help understand how that relates specifically to partnerships?

Also, You suppose because You do not understand that concept, You are having trouble calculating problems like the following. Any help you can provide explaining how to solve them is much appreciated.

Sally and Andy are partners in Just Hats, LLC. Andy works in the business for an agreed salary draw of $4,000 per month. Sally has invested $200,000 in the business and Andy invested $100,000. The net income of the business is $168,000 for the year. Income is distributed based on the investment of each partner after allocation for salary. How much net income is allocated to Sally?

Mary and David are partners who share profits and losses on a 3:1 basis. This means Mary receives 75% and David receives 25% of income after any allocations. Mary receives a salary allowance of $15,000. Earnings for the period total $51,000. What will be the total amount credited to Mary's Capital account when the Income Summary account is closed?

Reference no: EM132315419

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