On January 1, 2011, Lamb and Mona LLP Admitted Noris

question 44

Essay

On January 1, 2011, Lamb and Mona LLP admitted Noris to a 20% interest in net assets for an investment of $50,000 cash. Prior to the admission of Noris, Lamb and Mona had net assets of $100,000 and an income-sharing ratio of 25% to Lamb and 75% to Mona. After the admission of Noris, the partnership contract included the following provisions:
Salary of $40,000 a year to Noris.
Remaining net income in ratio Lamb 20%, Mona 60%, Noris 20%
During the fiscal year ended December 31, 2011, the partnership had income of $90,000 prior to recognition of salary to Noris.
-James, Keller, and Rivers have the following capital balances; $48,000, $70,000 and $90,000 respectively. Because of a cash shortage James invests an additional $12,000 on June 1st. Each partner withdraws $1,000 per month. James, Keller, and Rivers receive a salary of $13,000, $15,000 and $20,000, respectively, for work done during the year. Each partner receives interest of 8% on their weighted average capital balance without regard to normal drawings. Any remaining profits are split 20%, 30%, and 50% respectively. The net income for the year is $30,000. What are the ending capital balances for each partner?

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Definitions:

Total Revenue

Total revenue is the full amount of money received by a company for its goods or services before any expenses are subtracted.

Average Revenue

Total revenue divided by the quantity sold

Total Revenue

The cumulative sum of funds a business accumulates from selling products or offering services over a specific duration.

Government

The organization or system by which a community or nation is governed, responsible for making and enforcing laws, policies, and regulations.