to reflect the fact that DD could no longer devote any time to the store’s operations. The new agreement allows AA a salary of 18,000 and the remaining profits and losses are divide equally. In 2021, an error was discovered such that the 2020 reported income was understated by 4,000. The partnership income of 25,000 for 2021 included the 4,000 related to year 2020. In the reported net income of 25,000 for the year 2021, AA and DD would have? a. 21,900;3,100 b. 17.100;17.100 c. 0; 0 d. 12,500; 12,500
AA and DD created a
agreement provided that AA receive a salary of 10,000 and DD a salary of 5,000 to recognize they
relative time spent in operating the store. Remaining
DD respectively. Income for 2020, the first year of operations, of 13,000 was allocated 8,800 to AA
and 4,200 to DD. On January 1, 2021, the partnership agreement was changed to reflect the fact that
DD could no longer devote any time to the store’s operations. The new agreement allows AA a salary of 18,000 and the remaining profits and losses are divide equally. In 2021, an error was
discovered such that the 2020 reported income was understated by 4,000. The partnership income of
25,000 for 2021 included the 4,000 related to year 2020. In the reported net income of 25,000 for the
year 2021, AA and DD would have?
a. 21,900;3,100
b. 17.100;17.100
c. 0; 0
d. 12,500; 12,500
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