Bertram and Ernest share profits and losses equally after salary and interest allowances. Bertram and Ernest receive salary allowances of $40,000 and $60,000, respectively, and both partners receive 10% interest on their average capital balances. Average capital balances are calculated at the beginning of each month, regardless of when additional capital contributions or permanent withdrawals are made subsequently within the month. Partners drawings of $3,000 per month are not used in determining the average capital balances. Total net income for 2014 is $240,000. January 1 capital balances Yearly drawings ($3,000 a month) Permanent withdrawals of capital: June 3 May 2 Additional investments of capital: July 3 October 2 Bertram $200,000 (36,000) (24,000) 80,000 Ernest $240,000 (36,000) (30,000) 100,000 If the average capital balances for Bertram and Ernest are $200,000 and $240,000, what will the total partnership profit allocations be for Bertram and Ernest in 2014? OA. $120,000 and $120,000 B. $140,000 and $100,000 OC. $100,000 and $140,000 D. $108,000 and $132,000

Bertram and Ernest share profits and losses equally after salary and interest allowances. Bertram and Ernest receive salary allowances of $40,000 and $60,000, respectively, and both partners receive 10% interest on their average capital balances. Average capital balances are calculated at the beginning of each month, regardless of when additional capital contributions or permanent withdrawals are made subsequently within the month. Partners drawings of $3,000 per month are not used in determining the average capital balances. Total net income for 2014 is $240,000. January 1 capital balances Yearly drawings ($3,000 a month) Permanent withdrawals of capital: June 3 May 2 Additional investments of capital: July 3 October 2 Bertram $200,000 (36,000) (24,000) 80,000 Ernest $240,000 (36,000) (30,000) 100,000 If the average capital balances for Bertram and Ernest are $200,000 and $240,000, what will the total partnership profit allocations be for Bertram and Ernest in 2014? OA. $120,000 and $120,000 B. $140,000 and $100,000 OC. $100,000 and $140,000 D. $108,000 and $132,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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