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

Question

Meghan Preston

Business

4 March, 20:28

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

+3

Answers (1)

Know the Answer?

Cassandra Harmon · Answer 1

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