Carey and Drew formed a partnership on January 1, 2008. Carey invested $100,000, Drew $70,000. Each withdrew $12,000 on each of the following dates during 2008: February 1, August 1, and November 1. These withdrawals in total were equal to salaries for the year. Interest of 8 percent was to be paid partners on the basis of their average capital balances excluding net income. Additionally, Carey was to get a 20 percent bonus based on partnership net income after the bonus, but before the salaries and interest.
Any remaining profit (or loss) was to be allocated equally among the partners.
Required:
1) If partnership net income was $150,000, how was it to be allocated between Carey and Drew?
Order of allocation: bonus, salaries, interest. Round to the nearest whole dollar.
2) Prepare the journal entry to distribute income to the partners.

Question

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The Answer of Carey and Drew formed a partnership on January 1, 2008. Carey invested $100,000, Drew $70,000. Each withdrew $12,000 on each of the following dates during 2008: February 1, August 1, and November 1. These withdrawals in total were equal to salaries for the year. Interest of 8 percent was to be paid partners on the basis of their average capital balances excluding net income. Additionally, Carey was to get a 20 percent bonus based on partnership net income after the bonus, but before the salaries and interest.
Any remaining profit (or loss) was to be allocated equally among the partners.
Required:
1) If partnership net income was $150,000, how was it to be allocated between Carey and Drew?
Order of allocation: bonus, salaries, interest. Round to the nearest whole dollar.
2) Prepare the journal entry to distribute income to the partners.

Carey and Drew Formed a Partnership on January 1, 2008