Hay,Straw and Clover formed the HSC Partnership,agreeing to share profits and losses equally.Clover will manage the business for which he will receive a guaranteed payment of $30,000 per year.Cash receipts and disbursements for the year were as follows What is Clover's share of the partnership's ordinary income and guaranteed payment?

Question

Hay,Straw and Clover formed the HSC Partnership,agreeing to share profits and losses equally.Clover will manage the business for which he will receive a guaranteed payment of $30,000 per year.Cash receipts and disbursements for the year were as follows   What is Clover's share of the partnership's ordinary income and guaranteed payment?

Quizplus · Accepted Answer

First, we need to calculate the partnership's ordinary income by adding up all the cash receipts and subtracting the cash disbursements:
$70,000 + $20,000 - $45,000 - $15,000 = $30,000

Since profits and losses are shared equally, each partner's share of the ordinary income is $30,000/3 = $10,000.

Now we need to determine Clover's total compensation, which includes both his share of the partnership's ordinary income AND his guaranteed payment. Clover's share of the ordinary income is $10,000, and his guaranteed payment is $30,000, so his total compensation is $40,000.

Hay,Straw and Clover Formed the HSC Partnership,agreeing to Share Profits