Question

Hanna, Marnie, and Jessa have operated a partnership as filmmakers for a number of years. At the end of the year, before any allocation of profits, the partners have the following capital account balances:

Hanna $25.000
Marnie 15.000
Jessa 10.000
The partnership agreement states that profits should be allocated in proportion to the capital account balances. If the partnership earns $600,000 in the current year, how much of the profit will be allocated to Marnie?
a. $600,000.
b. $180,000.
c. $200,000.
d. $150,000.

Answer 1

To find how much profit will be allocated to Marnie, calculate Marnie's proportion of the total capital and apply that percentage to the total profit. Marnie's share is 30% of the partnership's profits, which equals $180,000.

Step-by-step explanation:

The question asks about the allocation of profits among partners in a partnership based on their capital account balances. To determine how much of the profit will be allocated to Marnie, we first calculate the total capital invested by all partners, which is $25,000 (Hanna) + $15,000 (Marnie) + $10,000 (Jessa) = $50,000. Marnie's share of the total capital is $15,000/$50,000, which is 30%. Therefore, Marnie will receive 30% of the $600,000 profits, which amounts to $180,000.

Answer 2

Answer: b. $180,000

Step-by-step explanation:

Profit should be allocated according to capital account balances. Marnie's capital account proportion is:

= 15,000 / (25,000 + 15,000 + 10,000)

= 15,000 / 50,000

= 30%

If the profit is $600,000, Marnie's share is:

= 30% * 600,000

= $180,000