Allocating profits and losses to the partners, preparing partnership financial statements
Edwards, French, and Gill formed the E, F and Gill partnership. Edwards invested $21,000; French, $35,000; and Gill, $44,000. Evans will manage the store; Furr will work in the store three-quarters of the time; and Gill will not work.
Requirements
1. Compute the partners' shares of profits and losses under each of the following plans:
a. Net loss is $42,000, and the partnership agreement allocates 45% of profits to Edwards, 35% to French, and 20% to Gill. The agreement does not discuss the sharing of losses b. Net income for the year ended September 30, 2012, is $97,000. The first $25,000 is allocated on the basis of partner capital balances. The next $48,000 is based on service, with $38,000 going to Edwards and $10,000 going to French. Any remainder is shared equally.
2. Revenues for the year ended September 30, 2012, were $209,000, and expenses were $112,000. Under plan (b), prepare the partnership income statement for the year