Powell is the managing partner of Power Partnership. He is given an incentive of 5% bonus on profit. The profit of the partnership id P400,000 and income tax rate is 30%. Instruction: Determine the amount of bonus under each of the following assumptions: 1. Bonus is computed based on profit before deduction for bonus and income tax. 2. Bonus is computed based on profit after deduction for bonus but before deduction for income tax. 3. Bonus is computed based on profit before deduction for bonus but after deduction for income tax. 4. Bonus is computed based on profit after deduction for both bonus and income tax.

Powell is the managing partner of Power Partnership. He is given an incentive of 5% bonus on profit. The profit of the partnership id P400,000 and income tax rate is 30%. Instruction: Determine the amount of bonus under each of the following assumptions: 1. Bonus is computed based on profit before deduction for bonus and income tax. 2. Bonus is computed based on profit after deduction for bonus but before deduction for income tax. 3. Bonus is computed based on profit before deduction for bonus but after deduction for income tax. 4. Bonus is computed based on profit after deduction for both bonus and income tax.

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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n the year ended 31/12/2018 total income of Palestine co,20,000 if A partner received 5,000 annual salary and reaming divided equally between the two partners A and B so Finally the reamig profit should be allocated to partners will be 15,000 Select one: True False
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Romeo is trying to decide whether to accept a salary of P40,000 or a salary of P25,000 plus a bonus of 10% of net income after salary and bonus as a means of allocating profit among the partners. Salaries traceable to the other partners are estimated to be P100,000. What amount of income would be necessary so that Romeo would consider the choices equal: A. 165,000 B. 290,000 C. 265,000 D. 305,000
Bee, Cee and Dee, accountants, agree to form a partnership and to share profits in the ratio of 5:3:2. They also agreed that Dee is to be lowed a salary of P 28,000 and that Cee is to be guaranteed P 21,000 as his share of the profits. During the first year of operation, service revenue are P 180,000, while expenses total P 96,000. What amount of net income should be credited to Bee's capital account? What amount of net income should be credited to Dee's capital account?
! Required information [The following information applies to the questions displayed below.] The partnership agreement of the G&P general partnership states that Gary will receive a guaranteed payment of $18,700, and that Gary and Prudence will share the remaining profits or losses in a 45/55 ratio. For year 1, the G&P partnership reports the following results: Sales revenue Gain on sale of land (§1231) Cost of goods sold Depreciation-MACRS Employee wages Cash charitable contributions Municipal bond interest Other expenses $ 85,000 6,350 (33,500) (16,800) (12,100) (5,000) 5,000 (5,100) Note: Negative amounts should be indicated by a minus sign. c. What do you believe Gary's share of self-employment income (loss) to be reported on his year 1 Schedule K-1 should be, assuming G&P is an LLC and Gary spends 2,000 hours per year working there full time? Self-employment income (loss)
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Item Nos. 11 and 12 are based on the following information: The partnership contract of partners L and M provides that L, the managing partner is allowed a bonus of 20% of the profit after taxes. The partnership is subject to an income tax rate of 35% of the profit. During 200C, the partnership earned profit before taxes of P 113,000. 11. If the bonus is based on the profit after taxes but before bonus, how much is the bonus of L? а. Р 13,000. P 14,500. С. b. P 13,250. d. P 14,690.
The partnership agreement of the G&P general partnership states that Gary will receive a guaranteed payment of $14,500, and that Gary and Prudence will share the remaining profits or losses in a 45/55 ratio. For year 1, the G&P partnership reports the following results: Sales revenue Gain on sale of land ($1231) Cost of goods sold Depreciation-MACRS Employee wages Cash charitable contributions Municipal bond interest Other expenses (Negative amounts should be indicated by a minus sign.) Problem 20-61 Part a (Algo) a-1. How much ordinary income (loss) is allocated to Gary for the year? a-2. Compute Gary's share of separately stated items to be reported on his year 1 Schedule K-1, including his self-employment income (loss). Req A1 Complete this question by entering your answers in the tabs below. Req A2 $ 80,700 6,900 (28,200) (18,100) (17,200) (4,600) Description Separately Stated Items on Schedule K-1: §1231 gains Cash charitable contributions Compute Gary's share of separately stated…
The partnership agreement of Jones, King, and Lane provides for the annual allocation of the business's profit or loss in the following sequence: • Jones, the managing partner, receives a bonus equal to 15 percent of the business's profit. • Each partner receives 10 percent interest on average capital investment. Any residual profit or loss is divided equally. The average capital investments for 2021 were as follows: Jones King Lane The partnership earned $84,000 net income for 2021. Prepare a schedule showing how the 2021 net income should be allocated to the partners. (Loss amounts should be indicated with a minus sign.) Net income Bonus Interest $ 190,000 380,000 570,000 Remainder to allocate Total allocation Jones King Lane Total
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9. JJ&T Partnership has three partners, James Small, Josh Platt, and Turner Lyle, who allocate net income according to the services provided and any remainder equally. The partnership agreement states that James and Turner will provide services for $2,500 a month while Josh will provide services for $3,750. For the fiscal year ending December 31, 2015, the partnership earned $192,600. Determine the amount allocated to each partner and prepare the journal entry to record the division of net income.