Original Accounting
EXERCISE 13-3
(1) Allocation of $220,000 of Partnership Income
Cumulative Johnson Larson Kragen Total
Profit and loss percentage 1/3 1/3 1/3 Salary $50,000 $60,000 $ — $110,000 Bonus (see Note A) — — 20,000 130,000 Interest on capital 4,000 2,500 14,500 151,000 Balance 23,000 23,000 23,000 220,000 Total $77,000 $85,500 $57,500
Exercise 13-3, Concluded
(2) Allocation of $34,000 of Partnership Loss Cumulative Johnson Larson Kragen Total__
Profit and loss percentage 1/3 1/3 1/3 Salary $ 50,000 $ 60,000 $ — $110,000 Bonus (see Note A) — — — 110,000 Interest on capital 4,000 2,500 14,500 131,000 Balance (55,000) (55,000) (55,000) (34,000) Total $ (1,000) $ 7,500 $(40,500)
(3) Allocation of $132,000 of Partnership Income Cumulative Johnson Larson Kragen Total
Profit and loss percentage 1/3 1/3 1/3 Salary $50,000 $60,000 $ — $110,000 Bonus (see Note A) — — 12,000 122,000 Interest on capital (see Note B) 1,905 1,190 6,905 132,000 Balance — — — 132,000 Total $51,905 $61,190 $18,905
Note A: Calculation of Annual Bonus
Bonus when Income Is $220,000 Bonus = 10% (Net Income – Bonus) 110% Bonus = 10% ($220,000) 110% Bonus = $22,000 Bonus = $20,000
Bonus when Loss Is $34,000
No bonus is due since there is a loss versus income.
Bonus when Income Is $132,000 Bonus = 10% (Net Income – Bonus) 110% Bonus = 10% ($132,000) 110% Bonus = $13,200 Bonus = $12,000
Note B: Stated Interest on Capital Cumulative Johnson Larson Kragen Total
Dollar $4,000 $2,500 $14,500 $21,000 Percent of total
(1) Allocation of $220,000 of Partnership Income
Cumulative Johnson Larson Kragen Total
Profit and loss percentage 1/3 1/3 1/3 Salary $50,000 $60,000 $ — $110,000 Bonus (see Note A) — — 20,000 130,000 Interest on capital 4,000 2,500 14,500 151,000 Balance 23,000 23,000 23,000 220,000 Total $77,000 $85,500 $57,500
Exercise 13-3, Concluded
(2) Allocation of $34,000 of Partnership Loss Cumulative Johnson Larson Kragen Total__
Profit and loss percentage 1/3 1/3 1/3 Salary $ 50,000 $ 60,000 $ — $110,000 Bonus (see Note A) — — — 110,000 Interest on capital 4,000 2,500 14,500 131,000 Balance (55,000) (55,000) (55,000) (34,000) Total $ (1,000) $ 7,500 $(40,500)
(3) Allocation of $132,000 of Partnership Income Cumulative Johnson Larson Kragen Total
Profit and loss percentage 1/3 1/3 1/3 Salary $50,000 $60,000 $ — $110,000 Bonus (see Note A) — — 12,000 122,000 Interest on capital (see Note B) 1,905 1,190 6,905 132,000 Balance — — — 132,000 Total $51,905 $61,190 $18,905
Note A: Calculation of Annual Bonus
Bonus when Income Is $220,000 Bonus = 10% (Net Income – Bonus) 110% Bonus = 10% ($220,000) 110% Bonus = $22,000 Bonus = $20,000
Bonus when Loss Is $34,000
No bonus is due since there is a loss versus income.
Bonus when Income Is $132,000 Bonus = 10% (Net Income – Bonus) 110% Bonus = 10% ($132,000) 110% Bonus = $13,200 Bonus = $12,000
Note B: Stated Interest on Capital Cumulative Johnson Larson Kragen Total
Dollar $4,000 $2,500 $14,500 $21,000 Percent of total