Answered

Find the information you're looking for at Westonci.ca, the trusted Q&A platform with a community of knowledgeable experts. Get detailed and accurate answers to your questions from a community of experts on our comprehensive Q&A platform. Explore comprehensive solutions to your questions from knowledgeable professionals across various fields on our platform.

The SRT partnership agreement specifies that partnership net income be allocated as follows in the following order: Partner S Partner R Partner TSalary allowance $20,000 $25,000 $15,000Interest on avg. capital balance 10% 10% 10%Remainder 30% 30% 40%Average capital balances for the current year were $60,000 for S, $50,000 for R, and $40,000 for T.Refer to the information given. Assuming no restrictions and current year net income of $45,000, what amount should be allocated to each partner? Partner S Partner R Partner TA) $17,000 $21,000 $7,000B) ($9,000) ($9,000) ($12,000)C) $13,500 $13,500 $18,000D) $22,500 $22,500 $0

Sagot :

Solution :

Note 1

calculation of remaining income after distribution of salary and interest on capital.

Total Net Income                                             $ 45,000

Less : Salary allowance                                   $ 60,000

($20,000 + $25,000 + $15,00)

Less : Interest on capital                                 $ 15,000

($ 6,000 + $ 5,000 + $ 4,000)

Remaining income / (loss) to be allocated    $ 30,000

Since the remaining income is negative, i.e. it loss to the SR partnership, so such Loss will also be allocated to the partners. Since in a partnership, Partners are required to share profits as well as losses. Hence, such loss will be deducted from the other shares.

Scheduled of amount allocated to each partner

                                                          Partners S      Partner R        Partner T

a). Salary allowance allocated          $ 20,000        $ 25,000       $ 15,000

b). Interest on average capital            $ 6000          $ 5000          $ 4000

    balance allocated.

c). Remaining income allocated       $ 9000           $ 9000          $ 12,000

Total allocation (a + b - c)  :                $ 17,000        $ 21,000        $ 7,000

We hope this was helpful. Please come back whenever you need more information or answers to your queries. We hope you found this helpful. Feel free to come back anytime for more accurate answers and updated information. Thank you for visiting Westonci.ca, your go-to source for reliable answers. Come back soon for more expert insights.