The DEF partnership reported net income of $130,000 for the year ended December 31, 20X8. According to the partnership agreement

Question

3 years ago

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The DEF partnership reported net income of $130,000 for the year ended December 31, 20X8. According to the partnership agreement

, partnership profits and losses are to be distributed as follows in the following order:
D Â Â Â Â Â Â Â Â Â Â Â Â EÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â F
Salaries Â Â Â Â Â Â Â Â Â Â Â Â Â Â $25,000Â Â Â Â Â Â Â Â Â Â Â Â $20,000Â Â Â Â Â Â Â Â $15,000
Bonus on net income Â Â Â Â Â Â Â 10%Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â -----Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â -----
Remainder Â Â Â Â Â Â Â Â Â Â Â 60% Â Â Â Â Â Â Â Â Â Â Â 30% Â Â Â Â Â Â Â Â 10%

Required:
How should partnership net income for 2008 be allocated to D, E, and F?

Business

1 answer:

gtnhenbr [62] · Answer 1 · 2022-03-08T20:32:58+03:00

Answer:

The DEF Partnership

Allocation of Partnership Net Income for 2008:

D E F Total

Net income $130,000

Salaries $25,000 $20,000 $15,000 (60,000)

Bonus on net income 13,000 ----- ----- (13,000)

Remainder 34,200 17,100 5,700 (57,000)

Total allocation $72,200 $37,100 $20,700 $130,000

Explanation:

a) Data and Calculations:

Net income for the year ended December 31, 2008 = $130,000

Order of distribution of partnership profits and losses:

D E F

Salaries $25,000 $20,000 $15,000

Bonus on net income 10% ----- -----

Remainder 60% 30% 10%

Bonus on net income = $13,000 ($130,000 * 10%)

Remainder after salaries and bonus = $57,000 ($130,000 - $73,000)

D = $34,200 ($57,000 * 60%)

E = $17,100 ($57,000 * 30%)

F = $5,700 ($57,000 * 10%)