Alfred and Barne share profits and losses in a ratio of 2:3, respectively, after salary allowances, interest allowances and bonus allocations. Alfred and Barne receive salary allowances of $30,000 and $60,000, respectively, and both partners receive 10% 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 2014 is $180,000. If net income after deducting the interest and salary allocations is more than $60,000, Barne receives a bonus of 5% of the original amount of net income.                                                                                                             Alfred                           Barne January 1 capital balances                                                        $  600,000                     $ 900,000 Yearly drawings ($3,000 a month)                                               36,000                           36,000   If the partnership experiences a net loss of $60,000 for the year, what will be the final net amount of profit or (loss) closed to each partner's capital account?   A. $30,000 to Alfred and ($90,000) to Barne   B. ($90,000) to Alfred and $30,000 to Barne   C. ($24,000) to Alfred and ($36,000) to Barne   D. ($30,000) to Alfred and ($30,000) to Barne

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Alfred and Barne share profits and losses in a ratio of 2:3, respectively, after salary allowances, interest allowances and bonus allocations. Alfred and Barne receive salary allowances of $30,000 and $60,000, respectively, and both partners receive 10% 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 2014 is $180,000. If net income after deducting the interest and salary allocations is more than $60,000, Barne receives a bonus of 5% of the original amount of net income.

 

                                                                                                          Alfred                           Barne

January 1 capital balances                                                        $  600,000                     $ 900,000

Yearly drawings ($3,000 a month)                                               36,000                           36,000

 

If the partnership experiences a net loss of $60,000 for the year, what will be the final net amount of profit or (loss) closed to each partner's capital account?

  A.

$30,000 to Alfred and ($90,000) to Barne

  B.

($90,000) to Alfred and $30,000 to Barne

  C.

($24,000) to Alfred and ($36,000) to Barne

  D.

($30,000) to Alfred and ($30,000) to Barne

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