Jerry, a partner in the JSK partnership, begins the year on January 1, 2018 with a capital balance of $20,000. The JSK partnership agreement states that Jerry receives 6% interest on his monthly weighted average capital balance without regard to normal drawings. Each partner draws $5,000 in cash from the business every quarter. Any withdrawal in excess of that will be accounted for as a direct reduction of the partner’s capital balance. On March 1, 2018, when the partnership tax return for 2017 was completed, Jerry’s capital account was credited for his share of 2017 profit of $120,000. Jerry withdrew $5,000 quarterly, beginning March 31st. On September 1, Jerry’s capital account was credited with a special bonus of $60,000 for business he brought to the partnership. What amount of interest will be attributed to Jerry for the year 2018 that will go toward his profit distribution for the year? $6,000 $6,250 $7,950 $8,400 None of these choices are correct
Jerry, a partner in the JSK partnership, begins the year on January 1, 2018 with a capital balance of $20,000. The JSK partnership agreement states that Jerry receives 6% interest on his monthly weighted average capital balance without regard to normal drawings. Each partner draws $5,000 in cash from the business every quarter. Any withdrawal in excess of that will be accounted for as a direct reduction of the partner’s capital balance. On March 1, 2018, when the partnership tax return for 2017 was completed, Jerry’s capital account was credited for his share of 2017 profit of $120,000. Jerry withdrew $5,000 quarterly, beginning March 31st. On September 1, Jerry’s capital account was credited with a special bonus of $60,000 for business he brought to the partnership. What amount of interest will be attributed to Jerry for the year 2018 that will go toward his profit distribution for the year? $6,000 $6,250 $7,950 $8,400 None of these choices are correct
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Jerry, a partner in the JSK partnership, begins the year on January 1, 2018 with a capital balance of $20,000. The JSK partnership agreement states that Jerry receives 6% interest on his monthly weighted average capital balance without regard to normal drawings. Each partner draws $5,000 in cash from the business every quarter. Any withdrawal in excess of that will be accounted for as a direct reduction of the partner’s capital balance.
- On March 1, 2018, when the partnership tax return for 2017 was completed, Jerry’s capital account was credited for his share of 2017 profit of $120,000.
- Jerry withdrew $5,000 quarterly, beginning March 31st.
- On September 1, Jerry’s capital account was credited with a special bonus of $60,000 for business he brought to the partnership.
What amount of interest will be attributed to Jerry for the year 2018 that will go toward his profit distribution for the year?
- $6,000
- $6,250
- $7,950
- $8,400
- None of these choices are correct
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