The profit and loss sharing agreement for the Jill,Kelly,and Lila partnership provides that each partner receives a bonus of 5% on the original amount of partnership net income if net income is above $25,000.Jill and Kelly receive a salary allowance of $7,500 and $10,500,respectively.Lila has an average capital balance of $260,000,and receives a 10% interest allocation on the amount by which her average capital account balance exceeds $200,000.Residual profits and losses are allocated to Jill,Kelly,and Lila in their respective ratios of 7:5:8.
Required:
Prepare a schedule to allocate $88,000 of partnership net income to the partners.

Question

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The Answer of The profit and loss sharing agreement for the Jill,Kelly,and Lila partnership provides that each partner receives a bonus of 5% on the original amount of partnership net income if net income is above $25,000.Jill and Kelly receive a salary allowance of $7,500 and $10,500,respectively.Lila has an average capital balance of $260,000,and receives a 10% interest allocation on the amount by which her average capital account balance exceeds $200,000.Residual profits and losses are allocated to Jill,Kelly,and Lila in their respective ratios of 7:5:8.
Required:
Prepare a schedule to allocate $88,000 of partnership net income to the partners.

The Profit and Loss Sharing Agreement for the Jill,Kelly,and Lila