A and B formed a partnership on January 1, 2020. A contributed capital of 50,000, while B contributed capital of 30,000. The partnership agreement provides for the following: Capital accounts are to be credited annually with interest at 5% of the beginning capital. Partner B is to be paid salary of 2,000 a month. Partner B is to receive a bonus of 10% based on the net income. The partnership's income statement for the year ended is as follows: Revenues - 101,000 Expenses (including salary, interest, and bonus) - 30,000 Net income - 71,000 Determine the amount of bonus.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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A and B formed a partnership on January 1, 2020. A contributed capital of 50,000, while B contributed capital of 30,000. The partnership agreement provides for the following:

  • Capital accounts are to be credited annually with interest at 5% of the beginning capital.
  • Partner B is to be paid salary of 2,000 a month.
  • Partner B is to receive a bonus of 10% based on the net income.

The partnership's income statement for the year ended is as follows:

Revenues - 101,000

Expenses (including salary, interest, and bonus) - 30,000

Net income - 71,000

Determine the amount of bonus.

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