The income statement for the Apple-Jack Partnership for the year ended December 31, 20X5, follows:
For the Year Ended December 31, 20X5
|Net Sales||$ 310,000|
|Cost of Goods Sold||(192,000|
|Gross Margin||$ 118,000|
|Net Income||$ 85,000|
Additional Information for 20X5
1. Apple began the year with a capital balance of $43,500.
2. Jack began the year with a capital balance of $119,000.
3. On April 1, Apple invested an additional $24,300 into the partnership.
4. On August 1, Jack inversed an additional $25,000 into the partnership.
5. Throughout 20X5, each partner withdrew $400 per week in anticipation of partnership net income. The partners agreed that these withdrawals are not to be included in the computation of average capital balances for purposes of income distributions.
Apple and Jack have agreed to distribute partnership net income according to the following plan:
|1. Interest on average capital balances||6%||6%|
|2. Bonus on net income before the bonus but after interest on average capital balances||10%|
|3. Salaries||$ 16,00||$ 17,00|
|4. Residual (if positive)||70%||30%|
|5. Residual (if negative)||50%||50%|
Prepare a schedule that discloses the distribution of partnership net income for 20X5.