Reference no: EM132818444

Tri Fecta, a partnership, had revenues of $200,000 in its first year of operations. The partnership has not collected on $20,000 of its sales and still owes $25,000 on $70,000 of merchandise it purchased. There was no inventory on hand at the end of the year. The partnership paid $25,000 in salaries. The partners invested $40,000 in the business and $20,000 was borrowed on a five-year note. The partnership paid $2,000 in interest that was the amount owed for the year and paid $8,000 for a two-year insurance policy on the first day of business. Tri Fecta has an effective income tax rate of 40%.

Required:

Problem 1: Compute net income for the first year for Tri Fecta