Question

Dividing Partnership Net Loss Leigh Meadows and Byron Leef formed a partnership in which the partnership agreement provided for salary allowances of $51,000 and $45,000, respectively. Determine the division of a $26,000 net loss for the current year, assuming remaining income or losses are shared equally by the two partners. Use the minus sign to indicate any deductions or deficiencies. Leigh Meadows Byron Leef Total Salary Allowance $ 51,000 $ 45,000 $ 96,000 Remainder $ $ $ Net Loss $ $ $

Answer 1

Answer:

Byron net loss=$12,187.50

Meadows net loss=(0.53125×26,000)=$13,812.50

Explanation:

Step 1: Determine total amount contributed by both partners

Meadows=$51,000

Byron=$45,000

Total amount contributed by both=Amount contributed by Meadows+Amount contributed by Byron

where;

Amount contributed by Meadows=$51,000

Amount contributed by Byron=$45,000

Substituting;

Total amount contributed by both=(51,000+45,000)=$96,000

Total amount contributed by both=$96,000

Step 2: Determine proportionate amount contributed by each partner

Proportion contributed by Meadows=Amount contributed by Meadows/Total amount contributed by both

where;

Amount contributed by Meadows=$51,000

Total amount contributed by both=$96,000

Substituting;

Proportion contributed by Meadows=(51,000/96,000)=0.53125

Proportion contributed by Byron=Amount contributed by Byron/Total amount contributed by both

where;

Amount contributed by Byron=$45,000

Total amount contributed by both=$96,000

Substituting;

Proportion contributed by Byron=(45,000/96,000)=0.46875

Step 3: Determine proportionate division of net loss

Proportion division to Byron=(0.46875×26,000)=$12,187.50

Proportion division to Meadows=(0.53125×26,000)=$13,812.50