Computing for shares in profit or loss

J F M Total
1-Jan 300000 300000 200000 800000
Mar-31 60000 -50000 50000 60000
10-Jan 80000 20000 -30000 70000
Dec-31 440000 270000 220000 930000

1. J 1200000x 44/93 567741.94 Ending capital at Dec. 31

F 1200000x 27/93 348387.1
M 1200000x22/93 283870.97

J average capital balance Time weighing factor M's average capital balance
1-Jan 300000x12/12 300000 1-Jan 200000x12/12
Mar-31 60000x9/12 45000 Mar-31 50000x9/12
10-Jan 80000x3/12 20000 10-Jan (30000)x3/12
Total 365000

J 365000 1200000x3650/8625
F 267500 1200000x2675/8625
M 230000 1200000x2300/8625
Total 862500
Divide based on this total

3 Interest - based on capital balance (beginning capital on Jan 1) Given unconditionally regardless of p
Given to partner to prevent them from removing interest
 Salaries- NOT Salaries Expense, given to industrial partner Given unconditionally regardless of p
Bonus - given if expected performance is exceed
4divided by 10 4 divided by10 2divided by 10
J F M Total
a. Interest 30000 30000 20000 80000
Salaries 90000 70000 160000
c. Bonus 240000 240000
Remainder 288000 288000 144000 720000
Total 408000 388000 404000 1200000

4 J F M Total
a. Interest 30000 30000 20000 80000
Salaries 90000 70000 160000
Bonus 10000 10000
Remainder -80000 -80000 -40000 -200000
Total 40000 20000 -10000 50000

Journal entries for #3 Income Summary 1200000

Johnson, Capital 408000
Froderman, Capital 388000
Moore, Capital 404000

Journal entries for #4 Income Summary 50000

Moore, Capital 10000 because net income for morre is neg
Johnson, Capital 40000
Froderman, Capital 20000
4 4 2 /10
Problem 5 J F M Total
a. Interest 30000 30000 20000 80000
Salaries 90000 70000 160000
Bonus - -
d. Remainder -116000 -116000 -58000 -290000
Total 4000 -16000 -38000 -50000

Journal entry for #5 Froderman, Capital 16000

Moore, Capital 38000
Johnson, capital 4000
Income Summary 50000

4 4 2 /10
Problem 6 J F M Total
a. Interest 30000 30000 20000 80000
Salaries 90000 70000 160000
Bonus 200000 200000
d. Remainder 304000 304000 152000 760000
Total 424000 404000 372000 1200000
 4 4 2 /10
Problem 7 J F M Total
a. Interest 30000 30000 20000 80000
Salaries 90000 70000 160000
Bonus 192000 192000
d. Remainder 307200 307200 153600 768000
Total 427200 407200 365600 1200000

4 4 2 /10
Problem 8 J F M Total
a. Interest 30000 30000 20000 80000
Salaries 90000 70000 160000
Bonus 160000 160000
d. Remainder 320000 320000 160000 800000
Total 440000 420000 340000 1200000
 Negative balances are permanent withdrawals What you can get from partnership
Drawings are just remporary withdrawals

Time weighing factor F's average capital balance Time weighing factor
200000 1-Jan 300000x12/12
37500 Mar-31 (50000)x9/12
-7500 10-Jan 20000x8/12
230000 267500

507826.09
372591.3
320000

n unconditionally regardless of partnership performance Net loss/gain

n unconditionally regardless of partnership performance

Bonus is 20% on net income (1.2M)/income given

What we are trying to divide

Net income = 50000

NOT 1.2M for this problem
(20% of 50000 net income)
how much to reduce
Net income is only 50000

use net income for morre is negative

Net loss = 50000

NO Bonus since no positive net income
Only interest and salaries are unconditionally given

(Not net income before bonus like previous problems)

Bonus is based on net income after bonus

Same journal entries as #3

Bonus = 0.2(Net income - Bonus)

B = 0.2(1200000-B)
B=240000-0.2B
1.2B=240000
Bonus = 200000

Bonus = Net income after interest and salaries

B = 0.2(Net income - Interest - Salaries)
B=0.2(1200000-80000-160000)
B=0.2(960000)
B=192000

Bonus = Net income after interest, salaries and bonus

B = 0.2(NI - I - S)
B=0.2(1200000-80000-160000-B)
B=0.2(960000-B)
1.2B=192000
Bonus = 160000