Kramer and Knox began a partnership by investing $60,000 and $80,000, respectively. During its first year, the partnership earened $160,000. Prepare calculations showing how the $160,000 income should de allocated to the partners under each of the following three separete plans for sharing income and loss: (1) the partners failed to agree on a method to share income ; (2) the partners agreed to share income and loss in proportion to their initial investments; and (3) the partners agreed to share income by granting a $50,000 per year salary allowance to Kramer, a $40,000 per year salary allowance to Knox, 10% interest on thir initial capital investments, and the remaining balance shared equally.
Note: Income allocation in a partnership.
Plan 3, Kramer , $84,000
Prepare journal entries to record the following four separate issuances of stock.
a. 2000 shares of no-per common stock are issued to the corporation’s promoters in exchanges for their efforts, estimated to be worth $40,000. The stock has no stated value.
b. 2000 shares of no-per common stock are issued to the corporation’s promoters in exchanges for their efforts, estimated to be worth $40,000. The stock has a $1 per share stated value.
c. 4000 shares of $5 par value common stock are issued for $35,000 cash.
d. 1000 shares of $50 per value preferred stock are issued for $60,000 cash.