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4 ADVANCED FINANCIAL ACCOUNTING-Lecture-1201-Meta صفحتي الرئيسة مقرراتي الدراسية ADVANCED FINANCIAL ACCOUNTING-Lecture-1201-Meta عام ACCT432 - First Hour...

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ADVANCED FINANCIAL ACCOUNTING-Lecture-1201-Meta

صفحتي الرئيسة


مقرراتي الدراسية


ADVANCED FINANCIAL ACCOUNTING-Lecture-1201-Meta


عام


ACCT432 - First Hour Exam - October 08, 2020


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Joumana and Hala share profits and losses in a ratio of 5:3 respectively. Joumana and Hala receive salary allowances of $10,000 and $20,000 respectively, and both partners receive 5% interest based upon the balance in their capital accounts on January 1. Partners’ drawings are not used in determining the average capital balances. Total net income for 2019 is $80,000. If net income after deducting the interest and salary allocations is greater than $20,000, Hala receives a bonus of 7% of the original amount of net income.
                                                                                    Joumana                      Hala
            January 1 capital balance $ 200,000 $ 300,000
            Yearly drawings ($1,500 / month) $ 18,000 $ 18,000
What is the amount of net income allocated to Hala?

Select one:

a. $ 35,000

b. $ 30,000

c. $ 40,600

d. $ 47,875

Business   Accounting   
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Answer #1

Total Income = $80000

Joumana Hala
Salary $10000 $20000
Interest on Capital $10000 $15000
Total Salary + Interest $20000 $35000
Bonus $5600
Total after bonus $20000 $40600

Interest on Capital:

Joumana : $200000 * 5% = $10000

Hala: $300000 * 5% = $15000

Total Income after Salary and Interest = $80000 - $20000 - $35000

= $25000

Since Total income after salary and interest is greater than $20000, Hala will receive a bonus of 7% on Total Income

So the Bonus amount = $80000 * 7% = $5600

Balance amount after distributing bonus = $25000 - $5600

= $19400

Now this $19400 will be divided between Joumana and Hala in the ratio of 5:3

Joumala's share = 19400 * 5/8 = $12125

Hala's share = 19400 * 3/8 = $7275

Total Amount of net income allocated to Hala = Salary + Interest + Bonus + Share in Net Income

= $20000 + $15000 + $5600 + $7275

= $47875  

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