8. A, B, and C are partners. A is to receive a salary of $2,000 per annum, B $2,500, and C $3,000. The balance of profits, after payment of salaries, is to be divided as to the first $20,000, 2/3 to A, and 1/6 each to B and C; and profits above $20,000 are to be divided equally among the three. A retires from active business, and gives up his right to salary for 19—. The profits for the year, before charging salaries, amount to $35,000. To what extent are A, B, and C, respectively, affected by A’s concession?
9. A and B, partners, finding themselves in want of further capital in their business, and both being possessed of real property, A deposited deed with the bankers of the firm as security for a loan of $2,000 to the firm. B arranged on some of his own property a mortgage for $1,500 with a private friend and paid the proceeds into the firm’s bank account. The bankers were eventually obliged to realize the security held by them which produced, after payment of all expenses, the sum of $2,850.
Prepare entries recording these transactions in the firm’s books.
10. In making an audit of the books of the partnership of A and B, you find that the agreed division of profits was to be on the basis of the capitals and of the time that they were left in the business.
The books show as follows: A’s account paid in January 1, $6,000; March 1, $2,000; June 1, $4,000; November 1, $1,000; withdrew April 1, $3,000; October 1, $2,000.
B’s account, paid in January 1, $4,000; February 1, $1,000; August 1, $3,000; withdrew May 1, $2,000; December 1, $1,000.
Prepare a statement showing method of arriving at correct profit distribution.
11. Bull and Bear entered into partnership, Bull contributing $100,000, and Bear $75,000. Profits and losses were to be divided, Bull 60% and Bear 40%, and interest was to be allowed on capital at the rate of 6% per annum. The profits for the first two years (after charging interest on capital) were $19,600 for the first year, $22,400 for the second; and the drawings of the partners in excess of their salaries were, Bull $1,800 first year, $2,000 second year; Bear $2,000 first year, $2,400 second year.
At the end of the second year, Peak was admitted to partnership, and put into the business capital equal to Bull’s capital at the time, on the same conditions as to interest. Profits were to be divided on the basis of capital.
The profits for the third year were $30,000, and the partners’ drawings in excess of salaries were: Bull $2,000, Bear $2,500, and Peak $1,500.