1 Allocation of net income Kluge 75000 2 Capital Kluge 21000

1. Allocation of net income: Kluge, $75,000 2. Capital: Kluge, $210,000 SHOW ME HOW PARTIAL FINANCIAL STATEMENTS Ronica Kluge and Sam Edwards formed a partnership on May 1, 20-1. Kluge contributed $120,000 and Edwards contributed $50,000. During the year, Kluge contributed an additional $30,000 The partnership agreement states that Kluge is to receive $35,000 and Edwards is to receive $65,000 as a salary allowance. Any remaining net income is to be divided as follows: Kluge, 40% and Edwards, 60%. The partnership earned net income of $200,000 for the fiscal year ending April 30, 20-2. During the first year of operation, Kluge and Edwards withdrew $15,000 and $20,000,

Solution

1. Satement showing Lower portion of Income statement of Partner ship firm Detail Amount Detail Amount Salary Allowance $100,000.00 Net Income earned $ 200,000.00 Kludge: $35000 Edward: $65000 Net profit distributed in partner $100,000.00 Kludge(40%):- 40000 Edward( 60%):- 60000 $   200,000.00 $ 200,000.00 2. Statement of Partner Equity Detail Amount Detail Amount Amount Drawing $35,000.00 Capital contributed $170,000.00 Kludge: $15000 Kludge: 120000 Edward: $20000 Edward:-50000 Balance Equity $365,000.00 Additional Contribution by Kludge $30,000.00 Kludge(40%):- 210000 Edward( 60%):- 155000 Salary allowance recived $100,000.00 Kludge: $35000 Edward: $65000 Income received from Firm $100,000.00 Kludge(40%):- 40000 Edward( 60%):- 60000 Total $400,000.00 Total $400,000.00