Question
The SRT partnership agreement specifies that partnership net income be allocated as follows in the following order: Partner S Partner R Partner T Salary allowance
The SRT partnership agreement specifies that partnership net income be allocated as follows in the following order:
Partner S Partner R Partner T
Salary allowance $20,000 $25,000 $15,000
Interest on avg. capital balance 10% 10% 10%
Remainder 30% 30% 40%
Average capital balances for the current year were $60,000 for S, $50,000 for R, and $40,000 for T.
Refer to the information given. Assuming no restrictions and current year net income of $45,000, what amount should be allocated to each partner?
Partner S Partner R Partner T
A) $17,000 $21,000 $7,000
B) ($9,000) ($9,000) ($12,000)
C) $13,500 $13,500 $18,000
D) $22,500 $22,500 $0
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