1. Xun, Yue and Zhuo have interests in XYZ Partnership. Partnership income for the year is $350,000. The partnership agr...
1. Xun, Yue and Zhuo have interests in XYZ Partnership. Partnership income for the year is $350,000. The partnership agreement specifies that Xun is to receive an annual salary of $200,000, Yue is to receive an annual salary of $50,000, and Zhuo is to receive an annual salary of $120,000. Any remaining income or loss is to be divided between the three partners in a 2:1:1 ratio. Salaries are to be fully implemented. Partnership income allocated to Yue is:
a. $40,000
b. $55,000
c. $50,000
d. $45,000
2. Xun, Yue and Zhuo have interests in XYZ Partnership. Partnership income for the year is $296,000. The partnership agreement specifies that Xun is to receive an annual salary of $200,000, Yue is to receive an annual salary of $50,000, and Zhuo is to receive an annual salary of $120,000. Any remaining income or loss is to be divided between the three partners in a 2:1:1 ratio. Salaries are to be proportionately implemented. Partnership income allocated to Xun is:
a. $172,000
b. $163,000
c. $160,000
d. $200,000
Homework Answers
1.)
Partnership Income for the year = $3,50,000
Salaries to be distributed fully = $3,70,000
(2,00,000+50,000+1,20,000)
Loss to be divided = 350000 -370000 = $20,000
Yue share in the loss (1/4) = ($5,000)
Yue salary Income = $50,000
Net Income received by Yue from Partnership firm = 50000-5000 = $ 45,000
Answer (d) $45,000
2)Since in the second case salary is proportional implemented, so salary shall be limited to available profits.
so, maximum salary that can be distributed is $2,96,000 , this will be divided among partner in the ration of their salary(fixed) which is 20:12:5
So, Xun share in the income will be $2,96,000*20/37 = $1,60,000
Answer (c) i.e. $1,60,000
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