Norr and Caylor established a partnership on January 1, 2010. Norr invested cash of $100,000 and Caylor invested $30,000 in cash and equipment with a book value of $40,000 and fair value of $50,000. For both partners, the beginning capital balance was to equal the initial investment. Norr and Caylor agreed to the following procedure for sharing profits and losses.
-12% interest on the yearly beginning capital balance
-10% per hour of work that can be billed to the partnerships clients
-the remainder divided in a 3:2 ration
The Articles of Partnership specified that each partner should withdraw no more $1,000 per month
For 2010, the partnerships income was $70,000. Norr had 1,000 billable hours, and Caylor worked 1,400 billable hours. In 2011, the partnerships income was $24,000, and Norr and Caylor worked 800 and 1,200 billable hours respectively. Each partner withdrew $1,000 per month throughout 2010 and 2011.
Determine the amount of net income allocated to each partner for 2010.
Determine the balance in both capital accounts at the end of 2010
Determined the amount of net income allocated to each partner for 2011. Round all calculations to the nearest whole dollar.
Determine the balance in both capital accounts at the end of 2011 to the nearest dollar.
This question was answered on: Sep 16, 2020
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