Elliot, Ford, and Grant formed the E, F, and G partnership. Elliot invested $24,000, Ford $34,000, and Grant $42,000. Elliot will manage the store; Ford will work in the store three-quarters of the time; and Grant will not work.
Requirements
1. Compute the partners' shares of profits and losses under each of the following plans:
a. Net loss is $47,000, and the partnership agreement allocates 45% of profits to Elliot, 35% to Ford, and 20% to Grant. The agreement does not specify the sharing of losses.
b. Net income for the year ended September 30, 2012, is $99,000. The first $30,000 is allocated based on partner capital balances. The next $39,000 is based on service, with $29,000 going to Elliot and $10,000 going to Ford. Any remainder is shared equally.
2. Revenues for the year ended September 30, 2012, were $210,000, and expenses were $111,000. Under plan (b), prepare the partnership income statement for the year.