C. Eastwood, A. North, and M. West are manufacturers’ representatives in the architecture business. Their capital accounts in the ENW partnership for 20X1 were as follows:
C. Eastwood, Capital
9/1 9,500 1/1 30,800
5/1 6,500
A. North, Capital
3/1 9,700 1/1 41,500
7/1 5,900
9/1 5,400
M. West, Capital
8/1 13,100 1/1 51,800
4/1 8,900
6/1 3,300
Required:
For each of the following independent income-sharing agreements, prepare an income distribution schedule.
a. Salaries are $16,700 to Eastwood, $21,500 to North, and $19,000 to West. Eastwood receives a bonus of 5 percent of net income after deducting his bonus. Interest is 10 percent of ending capital balances. Eastwood, North, and West divide any remainder in a 3:3:4 ratio, respectively. Net income was $80,850. (Amounts that are to be deducted from an individual partner's capital balance should be entered with a minus sign.)
b. Interest is 10 percent of weighted-average capital balances. Salaries are $24,800 to Eastwood, $22,000 to North, and $25,800 to West. North receives a bonus of 10 percent of net income after deducting the bonus and her salary. Any remainder is divided equally. Net income was $69,080. (Do not round intermediate calculations. Round the final answers to nearest whole dollar. Amounts that are to be deducted from an individual partner's capital balance should be entered with a minus sign.)
c. West receives a bonus of 20 percent of net income after deducting the bonus and the salaries. Salaries are $21,500 to Eastwood, $19,400 to North, and $15,100 to West. Interest is 10 percent of beginning capital balances. Eastwood, North, and West divide any remainder in an 8:7:5 ratio, respectively. Net income was $95,540. (Do not round intermediate calculations. Amounts that are to be deducted from an individual partner's capital balance should be entered with a minus sign.)