Ask Experts Questions for FREE Help !
Ask
    screechlover's Avatar
    screechlover Posts: 2, Reputation: 1
    New Member
    		  
    #1

    Aug 9, 2011, 07:40 PM
    Allocation of Net Income
    Tom and Jerry formed a partnership at the beginning of year 19x5 by investing $30,000 and $50,000 respectively, on January 1, 19x5. Tom invested an additional $15,000 on March 1, and Jerry invested an additional $5,000 on August 1 On November 1, 19x5, Tom withdrew $15,000, and on December 1, 19x5, jerry withdrew $25,000. Their ending capital accounts were $30,000. The net income from operations, before salary and interest allowances, amounts to $27,000.

    Tom and Jerry are to receive salaries of $12,000 and $14,400 respectively, and interest is 5% on their average capital balances with the remaining profit or loss being shared equally. Tom would receive
    A) 12,050
    B) 14,000
    C) 14,950
    D) 15,050

    Tom Jerry Total
    Interest 1500 1500 3000
    Salaries 12000 14400 26400
    Balance (1200) (1200) (2400)
    total 12300 14700 27000

    I can't figure out what I am doing wrong. Please any advice would be appreciated.

Check out some similar questions!

Determining net loss/net income from the end of period spreadsheet [ 3 Answers ]

In the end of period spreadsheet/worksheet for the current year, the Debit total is $436,700 and the credit total is $523,550. What is the amount of net loss or net income in preparing the income statement from the end-of-period spreadsheet?

Finding net income before bonuses and income taxes? [ 3 Answers ]

I've tried to do this question, but I'm coming up blank. I've searched the internet and looked in my textbook but can't find anything relating to this problem. A company awards an annual bonus to its managers. The bonus this year was $44,000. The bonus agreement says each branch manager...

Computing net income or net lose [ 1 Answers ]

On December 1, Doris Tuner opened a speech and hearing clinic. During December, her firm had the following transactions involving and expenses. Did the firm earn a net income or incur a net loss for the period? What was the amount? Paid $2,600 for advertising. Provided services for $2,300 in...

Consolidated Net Income Net Adjustment [ 3 Answers ]

I sure could use some help here. Dunn Corporation owns 100% of Grey Corporation’s common stock. On January 2, 2001, Dunn sold to Grey, for $40,000, machinery with a carrying amount of $30,000. Grey is depreciating the acquired machinery over a five-year life by the straight-line method. The net...

View more questions Search
 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.