Compute for the respective shares of the partners

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Reference no: EM132766934

Question - Use the following information for the next three cases:

The partnership agreement of A, B and C stipulates the following:

Partners A and C shall receive annual salaries of 12,000 and 8,000, respectively.

A bonus of 10% of profit after salaries but before deduction of bonus shall be given to Partner A, the managing partner.

Each partner shall receive 10% interest on average capital investments.

Any remaining profit or loss shall be shared as follows: 40% to A and 30% each to B and C.

The average capital investments of partners during the year are as follows:

A 100,000

B 60,000

C 120,000

Case 1: The partnership earns profit of 100,000.

Requirement: Compute for the respective shares of the partners on the partnership profit.

Case 2: The partnership earns profit of 10,000.

Requirement: Compute for the respective shares of the partners on the partnership profit.

Case 3: The partnership incurs loss of 20,000.

Requirement: Compute for the respective shares of the partners on the partnership loss.

Reference no: EM132766934

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