Hill, Jones, and Vose have been partners throughout 2014. Their average balances for the year and their balances at the end of the year before closing the nominal accounts are as follows: The income for 2014 is $108,000 before charging partners salary allowances and before payment of interest on average balances at the agreed rate of 5% per annum. Annual salary allocations are $12,000 to Hill, $9,600 to Jones, and $8,800 to Vose. The balance of income is to be allocated at the rate of 60% to Hill, 10% to Jones, and 30% to Vose. It is intended to distribute cash to the partners so that, after credits and allocations have been made as indicated in the preceding paragraph, the balances in the partners accounts will be proportionate to their residual profit-sharing ratios. None of the partners is to invest additional cash, but they wish to distribute the lowest possible amount of cash. Required: Prepare a schedule of partners accounts, showing balances at the end of 2014 before closing, the allocations of the net income for 2014, the cash distributed, and the closing balances.
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Hill, Jones, and Vose have been partners throughout 2014. Their average balances for the year and… was first posted on June 29, 2020 at 7:41 am.
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