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QUESTION 4 Anna and Robert formed a partnership under which it was agreed that they share the profits and losses of the partnership equally
QUESTION 4
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Anna and Robert formed a partnership under which it was agreed that they share the profits and losses of the partnership equally. The partnership agreement allowed the partners to draw a salary if the partners so agreed. It was agreed at the beginning of the income year that Anna would draw a salary of $20,000, for managing the business, and that the balance of profits and losses would be shared equally. The current year’s net profit after paying Anna’s salary was $35,000.
What is Anna's distribution of the partnership net income?
$17,500
$20,000
$27,500
$37,500
Expert Solution
The correct answer is$37,500AnnaRobertSalary Allowance$20,000$0Remaining Income 35,000 @ (1:1)$17,500$17,500Net Income$37,500$17,500
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