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During 2017, the Tastee Partnership reported income before guaranteed payments of $92,000. Stella owns a 90% profits interest and works 1,600 hours per year in the business. Euclid owns a 10% profits interest and performs no services for the partnership during the year. For services performed in 2017, Stella receives a “salary” of $6,000 per month. Euclid withdrew $10,000 from the partnership during the year.
If required, round your answers to the nearest dollar.
a. What is the amount of guaranteed payments made by the partnership during 2017? $
b. How much is the partnership’s ordinary income after any deduction for guaranteed payments? $
c. For 2017, how much income will Stella and Euclid report?
Stella: $
Euclid: $
Understanding and analyzing financial statement relationships merchandising organization.
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