PARTNERSHIP

1. Use the following information for the next three cases:

The partnership agreement of A, B and C stipulates the following:

• Partners A and C shall receive annual salaries of 12,000 and 8,000, respectively.
• A bonus of 10% of profit after salaries but before deduction of bonus shall be given to Partner A, the managing partner.
• Each partner shall receive 10% interest on average capital investments.
• Any remaining profit or loss shall be shared as follows: 40% to A and 30% each to B and C.

The average capital investments of partners during the year are as follows:

A 100,000

B 60,000

C 120,000

Case #1: The partnership earns profit of 100,000.

Requirement: Compute for the respective shares of the partners on the partnership profit.

Case #2: The partnership earns profit of 10,000.

Requirement: Compute for the respective shares of the partners on the partnership profit.

Case #3: The partnership incurs loss of 20,000.

Requirement: Compute for the respective shares of the partners on the partnership loss.