Question

In: Accounting

QUESTION 4 Anna and Robert formed a partnership under which it was agreed that they share...

QUESTION 4

  1. Anna and Robert formed a partnership under which it was agreed that they share the profits and losses of the partnership equally. The partnership agreement allowed the partners to draw a salary if the partners so agreed. It was agreed at the beginning of the income year that Anna would draw a salary of $20,000, for managing the business, and that the balance of profits and losses would be shared equally. The current year’s net profit after paying Anna’s salary was $35,000.

    What is Anna's distribution of the partnership net income?

    $17,500

    $20,000

    $27,500

    $37,500

Solutions

Expert Solution

The correct answer is $37,500
Anna Robert
Salary Allowance $20,000 $0
Remaining Income 35,000 @ (1:1) $17,500 $17,500
Net Income $37,500 $17,500

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