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What the profit allocations of each of the partners is

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Problem 1: Which of the following is a disadvantage to shareholders of using long-term debt rather than equity?

Select one:

a. Interest payments must be made on time regardless of a reduction in profitability.
b. Lenders do not have voting rights.
c. Lenders do not share in excess profits.
d. Interest is tax deductible.

Problem 2: The partnership agreement between Allen and Barry states that profit and loss sharing arrangements will be based on the ratio of the partner's capital balances. Allen and Barry have capital balances of $90 000 and $60 000 respectively at the end of the accounting perioD. If profit for the period is $48 000, the profit allocations of each of the partners is:

Select one:

a. Allen $28 800; Barry $19 200.
b. Allen $30 000; Barry $18 000.
c. Allen $24 000; Barry $24 000.
d. unable to be calculated from the information provided.

Reference no: EM132774720

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