Question

Nancy and Peter enter into a partnership and decide to share profits and losses as follows 1 The first allocation is a salary allowance with Nancy receiving $16,000 and Peter receiving $14,000 2 The second allocation is 20% of the partners' capital balances at year end. On December 31 3 Any remaining profit or loss is allocated equally the captal blances for Nancy , 2019, the capital balances for Nancy and Peter are S 8,000 and $25,000 For the year ending December 31, 2019, the partnership reported a net loss of $95,000 What is Peter's share of the net loss? OA. $40,200 OB. $7,300 O C. $21,200 O D. $19,000

Answer 1

Solution:

Particulars	Nancy	Peter	Total
Salary allowance	$16,000	$14,000	$30,000
Interest on partner's capital balances	$17,600	$5,000	$22,600
Total before allocation of remaining income			$52,600
Remaining income			$42,400
Remaining income allocation	$21,200	$21,200
Share of the net income	$54,800	$40,200

Option (A) is correct answer