Exercise 124 McGill and Smyth have capital balances on Janua

Exercise 12-4 McGill and Smyth have capital balances on January 1 of $54,000 and $48,000, respectively. The partnership income-sharing agreement provides for (1) annual salaries of $19,000 for McGill and $14,000 for Smyth, (2) interest at 10% on beginning capital balances, and (3) rermaining income or loss to be shared 70% by McGill and 30% by Smyth (1) Prepare a schedule showing the distribution of net income, assuming net income is $74,000. (If an amount reduces the account balance then enter with a negative sign preceding the number or parenthesis, e.g. -15,000, (15,000).) DIVISION OF NET INCOME McGill Smyth Total Salary allowance Interest allowance Total salaries and interest Remaining income/ deficiency Total division of net income (2) Prepare a schedule showing the distribution of net income, assuming net income is $26,000. (If an amount reduces the account balance then enter with a negative sign preceding the number or parenthesis, e.g. -15,000, (15,000).) DIVISION OF NET INCOME McGill Smyth Total Salary allowance Interest allowance Total salaries and interest Remaining income / deficiency Total division of net income

Solution

Solution 1:

Solution 2:

Solution 3:

Divison of Net Income
Particulars	Mcgill	Smyth	Total
Salary Allowance	$19,000.00	$14,000.00	$33,000.00
Interest Allowance	$5,400.00	$4,800.00	$10,200.00
Total salaries and interest	$24,400.00	$18,800.00	$43,200.00
Remaining income / deficiency	$21,560.00	$9,240.00	$30,800.00
Total division of net income	$45,960.00	$28,040.00	$74,000.00