Question

A partnership has the following accounting amounts: Sales = $70,000 Cost of goods sold = $40,000...

  1. A partnership has the following accounting amounts:
  1. Sales = $70,000
  2. Cost of goods sold = $40,000
  3. Operating expenses = $10,000
  4. Salary allocations to partners = $13,000
  5. Interest paid to banks = $2,000
  6. Partners’ withdrawals = $8,000

Partnership net income (loss) is:

  1. $20,000.
  2. $18,000.
  3. $5,000.
  4. $(3,000).
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Answer #1

Option d) is correct. i.e $5,000.

Net Income =Sales-Cost of Goods Sold -Operating Expenses-Salary Allocation to partners-Interest Paid to Banks
                       = $70,000-40,000-10,000-13,000-2,000
                         = $5,000
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