Peter and Paul have a partnership agreement that includes the following provisions regarding sharing profit or loss:
1. A salary allowance of $ 30,000 to Peter and $ 15,000 to Paul.
2. An interest allowance of 10% on capital balances at the beginning of the year.
3. The remainder to be divided 30% to Peter and 70% to Paul.
The capital balances on January 1, 2021, for Peter and Paul were $ 80,000 and $ 100,000, respectively. During 2021, the Peter and Paul Merchandising Partnership had sales of $ 330,000, cost of goods sold of $ 190,000, and operating expenses of $ 60,000.
Instructions
Prepare an income statement for the Peter and Paul Merchandising Partnership for the year ended December 31, 2021. As a part of the income statement, include a division of profit to each of the partners.

Question

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The Answer of Peter and Paul have a partnership agreement that includes the following provisions regarding sharing profit or loss:
1. A salary allowance of $ 30,000 to Peter and $ 15,000 to Paul.
2. An interest allowance of 10% on capital balances at the beginning of the year.
3. The remainder to be divided 30% to Peter and 70% to Paul.
The capital balances on January 1, 2021, for Peter and Paul were $ 80,000 and $ 100,000, respectively. During 2021, the Peter and Paul Merchandising Partnership had sales of $ 330,000, cost of goods sold of $ 190,000, and operating expenses of $ 60,000.
Instructions
Prepare an income statement for the Peter and Paul Merchandising Partnership for the year ended December 31, 2021. As a part of the income statement, include a division of profit to each of the partners.

Peter and Paul Have a Partnership Agreement That Includes the Following