1. The partnership of Susan and Randy began with the partners investing $6,600 and $2,200, respectively. At...
Question:
1. The partnership of Susan and Randy began with the partners investing $6,600 and $2,200, respectively. At the end of the first year, the partnership earned net income of $8,600. Under each of the following independent situations, calculate how much of the $8,600 each is entitled to:
Situation 1: No agreement on how income was to be shared.
Situation 2: Susan and Randy share income based on the beginning-of-year investment ratio.
Situation 3: Salary allowance of $2,860 to Susan and $2,470 to
Randy. Ten percent interest on beginning year’s investment.
Remainder split equally.
2. In Situation 3 what would the earnings to each partner be if net income were $4,000?
PartnershipA legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...
Step by Step Answer:
College Accounting A Practical Approach
ISBN: 9780134729312
14th Edition
Authors: Jeffrey Slater, Mike Deschamps