The partnership agreement for the partnership of A and B provides for the division of profits in the following manner:
a. For salary allowances--but only to the extent available.
b. For imputed interest on capital--but only to the extent available.
c. For any remaining profit in the profit and loss sharing ratio of 3:2.
For 2006, the profit before salary allowances and imputed interest was $60,000. Other data follow:
Required:
Calculate the division of profits for 2006.

Question

The partnership agreement for the partnership of A and B provides for the division of profits in the following manner:
a. For salary allowances--but only to the extent available.
b. For imputed interest on capital--but only to the extent available.
c. For any remaining profit in the profit and loss sharing ratio of 3:2.
For 2006, the profit before salary allowances and imputed interest was $60,000. Other data follow:
  Required:
Calculate the division of profits for 2006.

Quizplus · Accepted Answer

The Answer of The partnership agreement for the partnership of A and B provides for the division of profits in the following manner:
a. For salary allowances--but only to the extent available.
b. For imputed interest on capital--but only to the extent available.
c. For any remaining profit in the profit and loss sharing ratio of 3:2.
For 2006, the profit before salary allowances and imputed interest was $60,000. Other data follow:
  Required:
Calculate the division of profits for 2006.

The Partnership Agreement for the Partnership of a and B