Cain, Foley, and Hardy Formed a Partnership on January 1

question 2

Essay

Cain, Foley, and Hardy formed a partnership on January 1, 2010. Cain invested $60,000, Foley $60,000 and Hardy $140,000. Cain will manage the store and work 40 hours per week in the store. Foley will work 20 hours per week in the store, and Hardy will not work. Each partner withdrew 30 percent of his income distribution during 2010. If there was no income distribution to a partner, there were no withdrawals of cash.
Instructions
Compute the partners' capital balances at the end of 2010 under the following independent conditions: (Hint: Use T accounts to determine each partner's capital balances.)
(1) Net income is $120,000 and the income ratio is Cain 40%, Foley 35%, and Hardy 25%.
(2) Net income is $140,000 and the partnership agreement only specifies a salary of $50,000 to Cain and $30,000 to Foley.
(3) Net income is $86,000 and the partnership agreement provides for (a) a salary of $40,000 to Cain and $40,000 to Foley, (b) interest on beginning capital balances at the rate of 10%, and (c) any remaining income or loss is to be shared by Cain 40%, Foley 35%, and Hardy 25%.

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Definitions:

Competency Modeling

The process of defining the specific skills, knowledge, abilities, and behaviors required to effectively perform roles within an organization.

Blended Learning

An educational approach that combines online digital media with traditional classroom methods to enhance learning experiences.

Simulation Exercises

Training techniques or activities that replicate real-world scenarios, allowing individuals to practice or enhance their skills in a controlled environment.

Troika Dialogue

A format of discussion involving three parties or groups, often used in international negotiations or policy discussions.