Reference no: EM131216336
Adams, Brown, and Collins are partners in a sporting goods outlet. The business began operations on January 1, 19x1, with Adams investing $10,000, Brown $20,000, and Collins $26,000. Adams withdrew $4,000 on April1, Brown $6,000 on May 1 and $6,000 on November 1, and Collins withdrew $3,000 at the end of each quarter. Each partner is to receive a salary of $7,000 and 5% interest on the weighted average capital balance. The remaining income is shared in the ratio of 2:2:1 respectively for Adams, Brown, and Collins.
1. If the net income for 19x1 is $32,000, Collins will be allocated A. $8,470. C. $10,880. B. $9,840. D. $11,605.
2. If the net income for 19x1 is $11,000, Adams will be allocated A. $7,350. C. $3,570. B. $5,915. D. $2,480.
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