Answered: Stolton and Bright are partners in a…

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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Question

Stolton and Bright are partners in a business they started two years ago. The partnership agreement states that Stolton should receive a salary allowance of $15,500 and that Bright should receive a $21,800 salary allowance. Any remaining income or loss is to be shared equally.

Determine each partner’s share of the current year’s net income of $53,500. (Enter all allowances as positive values. Enter losses as negative values.)

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

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