Question

Leigh Meadows and Byron Leef formed a partnership in which the partnership agreement provided for salary allowances of $43,000 and $38,000, respectively. Determine the division of a $22,000 net loss for the current year, assuming remaining income or losses are shared equally by the two partners. Use the minus sign to indicate any deductions or deficiencies.

Answer 1

	Leigh Meadows	Byron Leef	Total
Salary allowances	$43,000	$38,000	$81,000
Net loss	- 51,500	- 51,500	- 103,000
Total appropriation	- $8,500	- $13,500	- $22,000

Net loss = - 422,000

Net loss to be divided after Salary allowances = Net loss - Salary allowances

= - 22,000 - 81,000

= - $103,000

Leigh Meadows' share of loss = - $103,000 x 1/2

= - $51,500

Byron Leef's  share of loss = - $103,000 x 1/2

= - $51,500

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