Scenario 13-1
Partners Tuba and Drum share profits and losses of their partnership equally after 1) annual salary allowances of $25,000 for Tuba and $20,000 for Drum and 2) 10% interest is provided on average capital balances. During 2008, the partnership had earnings of $50,000; Tuba's average capital balance was $60,000 and Drum's average capital balance was $90,000.
-Refer to Scenario 13-1. What would be the correct answer if an order of priority was in the partnership agreement whereby salary allowances have a higher priority than interest on capital allocations?

Question

Quizplus · Accepted Answer

The Answer of Scenario 13-1
Partners Tuba and Drum share profits and losses of their partnership equally after 1) annual salary allowances of $25,000 for Tuba and $20,000 for Drum and 2) 10% interest is provided on average capital balances. During 2008, the partnership had earnings of $50,000; Tuba's average capital balance was $60,000 and Drum's average capital balance was $90,000.
-Refer to Scenario 13-1. What would be the correct answer if an order of priority was in the partnership agreement whereby salary allowances have a higher priority than interest on capital allocations?

Scenario 13-1 Partners Tuba and Drum Share Profits and Losses of Their