Partners Sherif and Rafik receive a yearly salary of $100,000 and $120,000, respectively, plus interest of 4
Question:
Partners Sherif and Rafik receive a yearly salary of $100,000 and $120,000, respectively, plus interest of 4 percent on weighted average capital. Partnership income for the year, before any distributions to partners, is $300,000. Weighted average capital balances for Sherif and Rafik are $525,000 and $425,000, respectively. Assume full implementation.
Required
Calculate the bonus for the year, in each of the following situations:
a. Sherif gets a bonus of 20 percent of partnership income before distributions.
b. Rafik gets a bonus of 20 percent of partnership income after salaries and interest.
c. Sherif gets a bonus of 20 percent of partnership income after salaries, interest, and his bonus.
Using Financial Accounting Information The Alternative to Debits and Credits
ISBN: 978-1133161646
7th Edition
Authors: Gary A. Porter, Curtis L. Norton