[The following Information applies to the questions displayed below.]
Mo, Lu, and Barb formed the MLB Partnership by making Investments of $72,000, $280,000, and $448,000, respectively.
They predict annual partnership net Income of $477,000 and are considering the following alternative plans of sharing
Income and loss: (a) equally; (b) In the ratio of their initial capital Investments; or (c) salary allowances of $82,000 to Mo,
$61,500 to Lu, and $92,500 to Barb; Interest allowances of 10% on their Initial capital Investments; and the remaining
balance shared as follows: 20% to Mo, 40% to Lu, and 40% to Barb.
2. Prepare a statement of partners' equity showing the allocation of Income to the partners assuming they agree to use plan (c), that
Income earned is $477,000; and that Mo, Lu, and Barb withdraw $36,900, $50,900, and $66,900, respectively, at year-end.
Note: Do not round Intermediate calculations. Enter all allowances as positive values. Enter losses as negative values.
Initial partnership investments
Net income
MILIB PARTNERSHIP
Statement of Partners' Equity
For Year Ended December 31
Mo
72,000
Lu
280,000
Barb
448,000
Total
800,000
Total net income
Total
72,000
280,000
448,000
800,000
S
72,000 $ 280,000 $ 448,000 $
0
800,000
