Ramer and Knox began a partnership by investing $90,000 and $135,000, respectively.
The partners agreed to share net income and loss by granting annual salary allowances of $70,000 to Ramer and $44,000 to Knox, 8%
interest allowances on their investments, and any remaining balance shared equally. (Enter all allowances as positive values. Enter
losses as negative values.)
Required:
2a. Determine the partners' shares of Ramer and Knox given a first-year net income of $118,800.
2b. Determine the partners' shares of Ramer and Knox given a first-year net loss of $36,800.
Answer is complete but not entirely correct.
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Req 2A
Reg 2B
Determine the partners' shares of Ramer and Knox given a first-year net loss of $36,800.
Allocation of Partnership Income
Ramer
Knox
Total
Net Income (loss)
$ (36,800)
Salary allowances
$ 70,000 $ 44,000
114,000
Balance of income (loss)
150,800
Interest allowances
7,200
10,800
18,000
Balance of income (loss)
168,800
Balance allocated equally
84,400
84,400
168,800