Holly and Luke formed a partnership, investing $240,000 and $80,000, respectively. Determine their participation in the year's net income of $380,000 under each of the following independent assumptions: No agreement concerning division of net income Divided in the ratio of original capital investment Interest at the rate of 15% allowed on original investments and the remainder divided in the ratio of 2:3 (2/5 to Holly and 3/5 to Luke) Salary allowances of $50,000 and $70,000, respectively, and the balance divided equally Allowance of interest at the rate of 15% on original investments, salary allowances of $50,000 and $70,000, respectively, and the remainder divided equally Holly Luke Total a. $fill in the blank 1 $fill in the blank 2 $fill in the blank 3 b. $fill in the blank 4 $fill in the blank 5 $fill in the blank 6 c. $fill in the blank 7 $fill in the blank 8 $fill in the blank 9 d. $fill in the blank 10 $fill in the blank 11 $fill in the blank 12 e. $fill in the blank 13 $fill in the blank 14 $fill in the blank 15
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
Holly and Luke formed a
- No agreement concerning division of net income
- Divided in the ratio of original capital investment
- Interest at the rate of 15% allowed on original investments and the remainder divided in the ratio of 2:3 (2/5 to Holly and 3/5 to Luke)
- Salary allowances of $50,000 and $70,000, respectively, and the balance divided equally
- Allowance of interest at the rate of 15% on original investments, salary allowances of $50,000 and $70,000, respectively, and the remainder divided equally
| Holly | Luke | Total | |
| a. | $fill in the blank 1 | $fill in the blank 2 | $fill in the blank 3 |
| b. | $fill in the blank 4 | $fill in the blank 5 | $fill in the blank 6 |
| c. | $fill in the blank 7 | $fill in the blank 8 | $fill in the blank 9 |
| d. | $fill in the blank 10 | $fill in the blank 11 | $fill in the blank 12 |
| e. | $fill in the blank 13 | $fill in the blank 14 | $fill in the blank 15 |
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