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Today, 10:12

The APB partnership agreement specifies that partnership net income be allocated as follows:

Partner A Partner P Partner B

Salary allowance 30000 10000 40000

Interest on average

capital balance 10% 10% 10%

Remainder 40% 40% 20%

Average capital balances for the current year were $50,000 for A, $30,000 for P, and $20,000 for B.

19. Refer to the information given. Assuming a current year net income of $50,000, what amount should be allocated to each partner?

Partner A Partner P Partner B

A) 20000 20000 10000

B) 16000 16000 8000

C) 19000 (3000) 34000

D) 17000 0 33000

A. Option A

B. Option B

C. Option C

D. Option D

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Answers (1)
  1. Today, 10:43
    0
    C) 19000 (3000) 34000

    Explanation:

    income: 50,000

    salaries (80,000) (sum of partner salaries)

    interest (10,000) (total capital 100,000 x 10% interest)

    net loss (40,000)

    Partner A

    50,000 + 30,000 salary + 5,000 interest - 16,000 loss share (40%) = 69,000

    It woulld be allocate: 69,000 - 50,000 = 19,000

    Partner B

    30,000 + 10,000 salary + 3,000 interest - 16,000 loss share (40%) = 27,000

    27,000 - 30,000 = - 3,000

    Partner C

    20,000 + 40,000 salary + 2,000 interest - 8,000 loss share (20%) = 54,000

    54,000 - 20,000 = 34,000
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