Carraway and Boos have a partnership agreement which includes the following provisions regarding sharing net...
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Accounting
Carraway and Boos have a partnership agreement which includes the following provisions regarding sharing net income or net loss:
1. A salary allowance of $48,000 to Carraway and $36,000 to Boos.
2. An interest allowance of 10% on capital balances at the beginning of the year.
3. The remainder to be divided 60% to Carraway and 40% to Boos.
The capital balance on January 1, 2014, for Carraway and Boos was $90,000 and $120,000, respectively. During 2014, the Carraway and Boos Partnership had sales of $495,000, cost of goods sold of $290,000, and operating expenses of $85,000.
Instructions
Prepare an income statement for the Carraway and Boos Partnership for the year ended December 31, 2014. As a part of the income statement, include a Division of Net Income to each of the partners. (13 marks)
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