Randy Nolan and Jill Brenton formed a partnership on May 1
Question and Solution
Randy Nolan and Jill Brenton formed a partnership on May 1, 20-1. Nolan contributed $50,000 and Brenton contributed $25,000. During the year, Nolan contributed an additional $10,000. The partnership agreement states that Nolan is to receive $15,000 and Brenton is to receive $50,000 as a salary allowance. Any remaining net income is to be divided as follows: Nolan, 40% and Brenton, 60%. The partnership earned net income of $110,000 for the fiscal year ending April 30, 20-2. During the first year of operation, Nolan and Brenton withdrew $15,000 and $40,000, respectively. 1. Prepare the lower portion of the income statement showing the allocation of net income between Nolan and Brenton for the fiscal year ended April 30, 20-2. 2. Prepare a statement of partners’ equity, showing each individual partner’s equity for the fiscal year ended April 30, 20-2.