QUESTIONS 1 THROUGH 5 ARE BASED UPON THE FOLLOWING INFORMATION: X&Z Partnership was formed 10/1/20....
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Accounting
QUESTIONS 1 THROUGH 5 ARE BASED UPON THE FOLLOWING INFORMATION:
X&Z Partnership was formed 10/1/20. Xena was a sole proprietor prior to teaming with Zate, and so was Zate. Xena contributed equipment with a fair value of $20,000 and book value of $15,000 prior to the partnership formation, and Zate contributed $80,000 cash.
Net income for X&Z Partnership for 2020 is $200,000. Xena & Zate agreed to distribute income according to the following plan order:
Salary of $10,000 to Xena and $10,000 to Zate, then bonus to Xena of 10% income and 20% bonus to Zate of income, then 5% of original capital contribution balance for each partner, then residual income or loss to Xena & Zate respectively, 3:7 ratio.
1. What amount was recorded to Xena's capital account at the partnership formation?
2. What are the total bonuses allocated to the partners?
3. What amount of income was Zate allocated for percentage of original capital account at the partnership formation?
4. What is the amount of residual income (loss) allocated to Xena?
5. What is the total income allocation to Zate?
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