Response to the following problem:
Rudy Trump, Monica Rivers, and Courtney Jetta have formed a partnership. Trump invested $20,000; Rivers, $40,000; and Jetta, $60,000. Trump will manage the store; Rivers will work in the store three-quarters of the time; and Jetta will not work.
Required
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 Trump, 35% to Rivers, and 20% to Jetta. The agreement does not discuss the sharing of losses.
b. Net income for the year ended September 30, 20X4, is $86,000. The first $30,000 is allocated on the basis of partner capital contributions. The next $30,000 is based on service, with $20,000 going to Trump and $10,000 going to Rivers. Any remainder is shared equally.
2. Revenues for the year ended September 30, 20X4, were $572,000, and expenses were $486,000. Under plan (b), prepare the partnership income statement for the year.