Question

Abbott and Costello are partners. Abbott draws a salary of $90,000 per year and Costello draws a salary of $150,000 per year. Each partners Drawing account however shows they have withdrawn $50,000 and $60,000 respectively. What is the total amount of salary they would show on their income distribution?

a. $240,000
b. $350,000
c. $110,000
d. None of the above

Answer 1

The total amount of salary Abbott and Costello would show on their income distribution is the sum of Abbott's $90,000 salary and Costello's $150,000 salary, equaling $240,000.

Step-by-step explanation:

The partners' salary shown on their income distribution is the total of their drawn salaries - not the amounts they withdrew from the partnership (drawings). In this case, Abbott has a salary of $90,000 per year and Costello has a salary of $150,000 per year. Therefore, the total amount of salary they would show on their income distribution is the sum of both their salaries: $90,000 (Abbott's salary) + $150,000 (Costello's salary) = $240,000.