BUS 208 Principles of Accounting II

Homework Assignment 1
a) If there is no agreement profts and losses are shared equally as follows:
Karen Savannah $150,000, and Abby Kim $150,000
b) Dividend in Capital Ratio = 350 : 50 = 400
Karen Savannah $300,000 x 350/400 = $ 262,500
Abby Kim $300,000 x 50/400 = $ 37,500
c) Net Income $300,000
Interest on Capital:
Karen Savannah $350,000 x 15% = $ 52,500
Abby Kim $50,000 x 15% =$ 7,500
Remaining Profts $240,000
Share of Profts (3:2)
Karen Savannah $240,000 x 3/5 =$144,000
Abby Kim $240,000 x 2/5 =$96,000
d) Net Income $300,000
Salary allowances $ 40,000 + $80,000 =$120,000
Remaining Profts $180,000
Share of Profts equally $180,000/2 = $90,000 each partner
e) Net Income $300,000
Interest on Capital $52,500 + $7,500 =$60,000
Salary allowances $50,000 + $70,000 =$120,000
Remaining Profts $120,000
Equal dividend $120,000/2 = $60,000 each partner