Assume the partnership agreement specifies net income is to be divided as follows: $30,000 to A and $40,000 to B for service with any remaining profit or loss divided equally between the partners.If net income for the current year is $85,000,A's distributive share of net income would be:

Question

Quizplus · Accepted Answer

Since A is entitled to $30,000 and there is $85,000 of net income, that means there is $55,000 left to be divided between the partners. B is entitled to $40,000, so there is $15,000 left to be divided equally. This means each partner would receive an additional $7,500 ($15,000 divided by 2). Therefore, A's distributive share would be $30,000 + $7,500 = $37,500.

Assume the Partnership Agreement Specifies Net Income Is to Be