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patriot [66]
3 years ago
15

Seth and Rachel have original investments of $50,000 and $100,000, respectively, in a partnership. The articles of partnership i

nclude the following provisions regarding the division of net income: interest on original investment at 10%; salary allowances of $27,000 and $18,000, respectively; and the remainder divided equally. How much of the net loss of $16,000 is allocated to Seth?
A. $4,000.
B. $6,000.
C. $16,000.
D. $8,000.
Business
1 answer:
dimulka [17.4K]3 years ago
8 0

Answer:

D. $8,000.

Explanation:

*Net loss is considered as the amount to be allocated between partners on equal sharing ratio. Otherwise the net allocated amount will be 76,000 ( -16000-5000-10000-27000-18000) net loss and Seth's share will be -38,000 (76000/2) . Question has no option of this amount.

                                          Statement of Partners Equity

                                          For the Year end MM-DD-YY

                                                    Seth                      Rachel

                                                       $                             $              

Beginning Capital balance =         0                             0

Investment by partners       =     50,000                 100,000    

interest Allowance              =       5000                     10,000

Salary Allowance                =       27000                    18,000

Net loss Allocated              =    <u>   (8,000)   </u>             <u>  (8,000)  </u>

Ending capital balance       =    <u>  74,000        </u>          <u> 120,000</u>

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Answer:

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Explanation:

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In order to calculate the expected returns, let's categorize the given data first.

Economy        Probability      Stock A       Stock B

Booming            0.30               10%               20%

Neutral               0.30                5%                 0%

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So,

Expected Return for Stock A:

A =   Sum of (all Probability x Stock A)

A = (0.30 x 0.10) + (0.30 x 0.05) + (0.40 x 0.00)

A = 0.045

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SD for A = Sum (Square Root (Probability*(Stock A Return - Expected Return of Stock A)²) )

SD for A = \sqrt{0.30*(0.10-0.045)^2 + 0.30*(0.05-0.045)^2+0.40*(0.00-0.045)^2}

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c) Portfolio Return Given that:

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Stock A                          4000              0.4               4.50%

Stock B                          6000             0.6                 2.0%

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                          = 0.03

<em><u>Portfolio Return = 3%</u></em>

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Answer:

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