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Question - William and Michael are partners in an online business. According to their partnership agreement, the two men must share profits on a 30% / 70% basis after any partners salary. Losses are shared on a 30% / 70% basis.
The agreement also allows for salary payments of $5,000 each. At the end of the financial year, their partnership profit and loss show that William and Michael have been paid a salary of $5,000 each and the business made an accounting net loss of $26,000 (after paying the above-mentioned salaries).
Required - Calculate the partnership distribution for each partner.
You must give reasons for your answer. Your discussion must include an analysis of the pertinent sections of the relevant legislation, rulings, and the relevant case law. If relevant, you must show your calculation. You must apply the law to the facts and provide YOUR OWN analysis of the issues and write a comprehensive answer to the question.
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