Question

Dante, Milton, and Cervantes formed a partnership and agreed to share profits in a 3:1:2 ratio after recognition of 5% interest on average capital balances and monthly salary allowances of $3,750 to Milton and $3,000 to Cervantes. Average capital balances were as follows:

Dante 300,000
Milton 240,000
Cervantes 180,000

Required:
Compute the net income (loss) allocated to each partner assuming the partnership incurred a $27,000 net loss.

Answer 1

Dante ($57,000)

Milton $33,000

Cervantes ($3,000)

Step-by-step explanation:

Salary --

Interest $15,000

Residual $(72,000)

Total $(57,000)

Milton

Salary $45,000

Interest $12,000

Residual $(23,000)

Total $(33,000)

Carventes

Salary $36,000

Interest $9,000

Residual $(48,000)

Total $(3,000)

Total

Salary ($45,000+$36,000) $81,000

Interest ($15,000+$12,000+$9,000)$36,000

Residual ($72,000)+($24,000)+(49,000) $(144,000)

Total ($57,000)+$33,000+($3,000) $(27,000)