In December of 2019, Ms. Havisham and Pip form a wedding planning business. They each own 50 percent of the partnership. The partnership establishes a September 30th year-end since most weddings are during the summer. Therefore, the partnership's initial year-end is September 30, 2020. For the month of December 2019, the partnership made a net income of $3,000 after Ms. Havisham's guaranteed payment of $1,000. From January through September of 2020, the partnership made a net income of $65,000 after a $1,500 per month guaranteed payment to Ms. Havisham.

a. How much income should Ms. Havisham report for 2019?
b. How much income should Ms. Havisham report for 2020?

Question

In December of 2019, Ms. Havisham and Pip form a wedding planning business. They each own 50 percent of the partnership. The partnership establishes a September 30th year-end since most weddings are during the summer. Therefore, the partnership's initial year-end is September 30, 2020. For the month of December 2019, the partnership made a net income of $3,000 after Ms. Havisham's guaranteed payment of $1,000. From January through September of 2020, the partnership made a net income of $65,000 after a $1,500 per month guaranteed payment to Ms. Havisham.
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a. How much income should Ms. Havisham report for 2019?
b. How much income should Ms. Havisham report for 2020?

Quizplus · Accepted Answer

The Answer of In December of 2019, Ms. Havisham and Pip form a wedding planning business. They each own 50 percent of the partnership. The partnership establishes a September 30th year-end since most weddings are during the summer. Therefore, the partnership's initial year-end is September 30, 2020. For the month of December 2019, the partnership made a net income of $3,000 after Ms. Havisham's guaranteed payment of $1,000. From January through September of 2020, the partnership made a net income of $65,000 after a $1,500 per month guaranteed payment to Ms. Havisham.
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a. How much income should Ms. Havisham report for 2019?
b. How much income should Ms. Havisham report for 2020?