Question
Bonny and Klyde entered into a partnership agreement and contributed the following amounts to the partnership. Bonny gave $65,000 cash to the new startup, and
Bonny and Klyde entered into a partnership agreement and contributed the following amounts to the partnership. Bonny gave $65,000 cash to the new startup, and Klyde gave $35,000 cash. The partnership agreement states that income and losses are distributed based on their beginning capital balances. At the end of the first quarter the company had a net loss of $18,000. Losses are common for new businesses but this one could be directly attributed to Klyde leaving $11,800 worth of inventory on the dock during a thunderstorm, thus ruining the items. How much of the loss of this first quarter should be allocated to each partner?
A. | Bonny is allocated $9,000; Klyde is allocated $9,000 | |
B. | Bonny is allocated $5,900; Klyde is allocated $5,900 | |
C. | Bonny is allocated $7,670; Klyde is allocated $4,130 | |
D. | Bonny is allocated $11,700; Klyde is allocated $6,300 |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started