Question
In: Accounting
Roberto and Reagan are both 25-percent owner/managers for Bright Light Incorporated. Roberto runs the retail store...
Roberto and Reagan are both 25-percent owner/managers for Bright Light Incorporated. Roberto runs the retail store in Sacramento, California, and Reagan runs the retail store in San Francisco, California. Bright Light Incorporated generated a $126,400 profit companywide made up of a $75,400 profit from the Sacramento store, a ($26,000) loss from the San Francisco store, and a combined $77,000 profit from the remaining stores. If Bright Light Incorporated is an S corporation, how much income will be allocated to Roberto?
Solutions
Expert Solution
According to the given question, Since both Roberto and Reagan are 25% owners of the corporation, the profits will be divided according to the ownership or their profit sharing ratio irrespective of the stores run by them.
Total Profit= $75,400-$26,000+$77,000
= $ 1,26,400
Profit will be distributed as follows:
Roberto and Reagan= $1,26,400*25% =$ 31,600 each
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