Question
Levin and Tom have agreed to distribute partnership net income according to the following plan: Levin Tom Interest on average capital balances 10% 6% Bonus
Levin and Tom have agreed to distribute partnership net income according to the following plan:
Levin Tom
Interest on average capital balances 10% 6%
Bonus on net income before the bonus
on average capital balances 5%
Salaries $20,000 $70,000
Residual (if positive) 60% 40%
Residual (if negative) 50% 50%
Additional information for 20x9 follows:
- Levin began the year with a capital balance of $75,000.
- Tom began the year with a capital balance of $100,000.
- On March 1, Levin invested an additonal $45,000 into the partnership.
A. What amounts were distributed to each partner with no restrictions if net income for Levin-Tom partnership for 20x9 was $125,000.
B. What amounts were distributed to each partner with no restrictions if net income for Levin-Tom partnership for 20x9 was $100,000.
C. What amounts were distributed to each partner to the extend possible if net income for Levin-Tom partnership for 20x9 was $100,000.
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