Summers and Winters Formed a Partnership on December 31,2009

question 108

Essay

Summers and Winters formed a partnership on December 31,2009.Summers contributed $90,000 cash and equipment with a market value of $60,000.Winters' investment consisted of: cash,$30,000; inventory,$20,000; all at market values.Partnership net income for 2010 and 2009 was $75,000 and $120,000,respectively.
Determine each partner's share of the net income for each year,assuming each of the following independent situations:
(a)Income is divided based on the partners' failure to sign an agreement.
(b)Income is divided based on a 2:1 ratio (Summers: Winters).
(c)Income is divided based on the ratio of the partners' original capital investments.
(d)Income is divided based on partners allowed 12% of the original capital investments,with salaries to Summers of $30,000 and Winters of $25,000 and the remainder to be divided equally.
Prepare the journal entry to record the allocation of the 2010 income under alternative (d)above.

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