Answer:
Carraway and Boos Partnership
Income Statement for the year ended December 31, 2020:
Sales Revenue $495,000
Cost of goods sold 290,000
Gross profit $205,000
Operating expense 85,000
Net income $120,000
Appropriation of Net Income:
Carraway Boos
Share of net income $51,429 $68,571
($120,000 * 3/7) ($120,000 * 4/7)
Step-by-step explanation:
a) Data and Calculations:
Carraway Boos
Capital balances $90,000 $120,000
Ratio of capital 3 4
The partnership uses the partners' capital balances to share the net income, in the absence of a contrary agreement or net income (loss) sharing ratio.