Reference no: EM133124460

Questions -

Q1. The profit and loss sharing agreement for the Sealy, Teske, and Ubank partnership provides that each partner receive a bonus of 5% on the original amount of partnership net income if net income is above $25,000. Sealy and Teske receive a salary allowance of $7,500 and $10,500, respectively. Ubank has an average capital balance of $260,000, and receives a 10% interest allocation on the amount by which his average capital account balance exceeds $200,000. Residual profits and losses are allocated to Sealy, Teske, and Ubank in their respective ratios of 2:2:1. Compute the share of the net income for each partner for each of the following partnership net income/losses.

A. Partnership Net Income 200,000

B. Partnership Net Loss 30,000

C. Partnership Net Income 300,000

2. The XYZ partnership provides a 8% bonus to Partner Y that is based upon partnership income, after deduction of the bonus. If the partnership's income is $200,000, how much is Partner Y's bonus allocation?