Find what is henson bonus

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Garcia and Henson formed a partnership on January 2, 2005 and agreed to share profits 90% and 10%, respectively. Garcia contributed capital of ?25,000. Henson contributed no capital but has a specialized expertise and manages the firm full time. There were no withdrawals during the year.

The partnership agreement provides for the following:

  • Capital accounts are to be credited annually with interest at 5% of beginning capital.
  • Henson is to be paid a salary of ?1,000 a month.
  • Henson is to receive a bonus of 20% of income calculated before deducting his salary, bonus and interest on capital account.

The partnership 2005 income statement as follows:

Revenues ? 96,450

Expenses (including salary, interest, and bonus) 49,700

Net income ? 46,750

Problem 1: What is Henson's 2005 bonus?

Reference no: EM132755252

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