Tom and jerry formed a partnership at the beginning of year, Ask an Expert

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Tom and Jerry formed a partnership at the beginning of year 19x5 by investing $30,000 and $50,000, respectively, on January 1, 19x5. Tom invested an additional $15,000 on March 1, and Jerry invested an additional $5,000 on August 1. On November 1, 19x5, Tom withdrew $15,000, and on December 1,.19x5, Jerry withdrew $25,000. Their ending capital accounts were $30,000 and $30,000. The net income from operations, before salary and interest allowances, amounts to $27,000.

1. If there is no agreement as to the division of net income, Tom will receive A. $27,000. B. $21,000. 4 c. $13,500. D. $7,500.

2. If net income is shared on the basis of average capital balances, Jerry will receive A. $12,000. B. $13,500. c. $14,100. D. $15,000.

3. Tom and Jerry are to receive salaries of$12,000and$14,400 respectively, and interest is 5% on their average capital balances with the remaining profit or loss being shared equally. Tom will receive A. $12,050. B. $14,000. c. $14,950. d.$15,050.

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Financial Accounting, Accounting

Category:- Financial Accounting
Reference No.:- M91972305

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