Question
Question 48 Alfred and Barne share profits and losses in a ratio of 2:3, respectively, after salary allowances, interest allowances and bonus allocations. Alfred and
Question 48
Alfred and Barne share profits and losses in a ratio of 2:3, respectively, after salary allowances, interest allowances and bonus allocations. Alfred and Barne receive salary allowances of $30,000 and $60,000, respectively, and both partners receive 10% interest based upon the balance in their capital accounts on January 1. Partners' drawings are not used in determining the average capital balances. Total net income for 2014 is $180,000. If net income after deducting the interest and salary allocations is more than $60,000, Barne receives a bonus of 5% of the original amount of net income.
Alfred Barne
January 1 capital balances $ 600,000 $ 900,000
Yearly drawings ($3,000 a month) 36,000 36,000
What is the total amount for the allocation of interest, salary, and bonus, and how much over-allocation is present?
A. | $240,000 and $60,000 | |
B. | $180,000 and $0 | |
C. | $249,000 and $69,000 | |
D. | $249,000 and $0 |
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