What is the Equity in Howell Income that should be reported by Acker in 2018?

Question

Quizplus · Accepted Answer

To calculate the equity in Howell Income that should be reported by Acker in 2018, we need to start with the beginning balance of equity and add any additional contributions, then subtract any distributions and finally add or subtract the share of partnership income or loss for the year.

Beginning Balance of Equity: $20,000 
Additional Contribution: $25,000 
Total Equity: $45,000

Acker's share of partnership income for the year is calculated as follows: 
Howell Income: $100,000 
Less: Partnership expenses and salaries ($30,000) 
Net Income: $70,000 
Acker's share (40%): $28,000

Therefore, Acker's equity in Howell Income at the end of 2018 is: 
Beginning Balance: $20,000 
Additional Contribution: $25,000 
Share of Net Income: $28,000 
Total Equity: $73,000

However, we need to account for any distributions made during the year. The question states that there were no distributions in 2018, so the final answer is: 
Equity in Howell Income that should be reported by Acker in 2018: $73,000 - $31,400 (Smith's equity) = $41,600.

What Is the Equity in Howell Income That Should Be