Brewer and Tony Have a Partnership Agreement Which Includes the Following

question 30

Essay

Brewer and Tony have a partnership agreement which includes the following provisions regarding sharing profit or loss:
1. A salary allowance of $30,000 to Brewer and $15,000 to Tony.
2. An interest allowance of 10% on capital balances at the beginning of the year.
3. The remainder to be divided 30% to Brewer and 70% to Tony.
The capital balances on January 1, 2013, for Brewer and Tony were $80,000 and $100,000, respectively. During 2013, the Brewer and Tony Merchandising Partnership had sales of $330,000, cost of goods sold of $190,000, and operating expenses of $60,000.
Instructions
Prepare an income statement for the Brewer and Tony Merchandising Partnership for the year ended December 31, 2013. As a part of the income statement, include a Division of Profit to each of the partners.

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Definitions:

Competitive Position

Describes an organization's relative standing in its industry or market, based on factors like market share, quality of products, and brand reputation.

Resource Allocation

The process of assigning and managing assets in a manner that supports an organization's strategic goals.

Goal Development

The process of identifying, setting, and planning how to achieve objectives.

Strategic Management

The process of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives.