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Jhumpa, Stewart, and Kelly are all one-third partners in the capital and profits of Firewalker General Partnership. In addition to their normal share of the partnership's annual income, Jhumpa and Stewart receive an annual guaranteed payment of $10,000 each to compensate them for additional services they provide. Firewalker's income statement for the current year reflects the following revenues and expenses: $ 340,000 3,300 1,200 Sales revenue Interest income Long-term capital gains Cost of goods sold Employee wages Depreciation expense Guaranteed payments Miscellaneous expenses (120,000) ( 75,000) (28,000) (20,000) ( 4,500) Overall net income $ 97,000 (Leave no answer blank. Enter zero if applicable.) How will Firewalker allocate ordinary business income and separately stated items to its partners? (Round your intermediate Iculations and final answers to the nearest whole dollar amount.) Description Jhumpa Stewart Kelly

Jhumpa, Stewart, and Kelly are all one-third partners in the capital and profits of Firewalker General Partnership. In addition to their normal share of the partnership's annual income, Jhumpa and Stewart receive an annual guaranteed payment of $10,000 each to compensate them for additional services they provide. Firewalker's income statement for the current year reflects the following revenues and expenses: $ 340,000 3,300 1,200 Sales revenue Interest income Long-term capital gains Cost of goods sold Employee wages Depreciation expense Guaranteed payments Miscellaneous expenses (120,000) ( 75,000) (28,000) (20,000) ( 4,500) Overall net income $ 97,000 (Leave no answer blank. Enter zero if applicable.) How will Firewalker allocate ordinary business income and separately stated items to its partners? (Round your intermediate Iculations and final answers to the nearest whole dollar amount.) Description Jhumpa Stewart Kelly

FINANCIAL ACCOUNTING
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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Jhumpa, Stewart, and Kelly are all one-third partners in the capital and profits of Firewalker General Partnership. In addition to their normal share of the partnership's annual income, Jhumpa and Stewart receive an annual guaranteed payment of $10,000 each to compensate them for additional services they provide. Firewalker's income statement for the current year reflects the following revenues and expenses: $ 340,000 3,300 1,200 (120,000) (75,000) ( 28,000) ( 20,000) (4,500) $ 97,000 Sales revenue Interest income Long-term capital gains Cost of goods sold Employee wages Depreciation expense Guaranteed payments Miscellaneous expenses Overall net income (Leave no answer blank. Enter zero if applicable.) b. How will Firewalker allocate ordinary business income and separately stated items to its partners? (Round your intermediate calculations and final answers to the nearest whole dollar amount.) Description Jhumpa Stewart Kelly
Transcribed Image Text:Jhumpa, Stewart, and Kelly are all one-third partners in the capital and profits of Firewalker General Partnership. In addition to their normal share of the partnership's annual income, Jhumpa and Stewart receive an annual guaranteed payment of $10,000 each to compensate them for additional services they provide. Firewalker's income statement for the current year reflects the following revenues and expenses: $ 340,000 3,300 1,200 (120,000) (75,000) ( 28,000) ( 20,000) (4,500) $ 97,000 Sales revenue Interest income Long-term capital gains Cost of goods sold Employee wages Depreciation expense Guaranteed payments Miscellaneous expenses Overall net income (Leave no answer blank. Enter zero if applicable.) b. How will Firewalker allocate ordinary business income and separately stated items to its partners? (Round your intermediate calculations and final answers to the nearest whole dollar amount.) Description Jhumpa Stewart Kelly
Expert Solution
Step 1

Calculation of ordinary business income 

CALCULATION PARTICULAR AMOUNT
     
A Sales revenue 340,000
B Cost of goods sold (120,000)
C=A-B Gross margin 220,000
  Other operating expense  
D Wages (75,000)
E Depreciation (28,000)
F Guranteed payment (20,000)
G Misc. Expense (4,500)
     
H= C-D-E-F-G Net income 92,500

 

Income to be allocated to each Partner 

Jhumpa = 92,500 /3 =$ 30,833

Stewart = 92,500 /3 =$ 30,833 

Kelly      = 92,500 /3 =$ 30,833

 

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