Question

ABC Company has three partners whose capital balances at the beginning of the year are :...

ABC Company has three partners whose capital balances at the beginning of the year are : Anna $200,000; Barbara $60,000; Clint $140,000. Partners agree to divide income and loss as follows:

a. Salary allowance of $40,000 to Anna, $30,000 to Barbara, and $20,000 to Clint;

b. Interest allowance of 10% on beginning-of-year capital balances; and

c. Any remaining balance to be divided equally.

Partnership net income is $160,000. The amount of partnership net income to be allocated to each partner is:

Multiple Choice

  • Anna $80,000; Barbara $24,000; Clint $56,000

  • Anna $63,333; Barbara $53,333; Clint $43,334

  • Anna $60,000; Barbara $46,000; Clint $54,000

  • Anna $53,333; Barbara $53,333; Clint $53,334

  • Anna $70,000; Barbara $46,000; Clint $44,000

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