17A-1

**Part. a.** The partnership of Tammy and Mark began with the partners investing $3,900 and $2,700, respectively. At the end of the first year, the partnership earned net income of $7,900. Under each of the following independent situations, calculate how much of the $7,900 each is entitled to:

**Part. b.** In Situation 3, what would the earnings to each partner be if net income were $4,700?

Brooke, and Mclody have capital balances before and the partners share losses and gains in a 321 ratio Al with a book value of $14,000 are sold, for a gain on malaton In your cakulations, assume that no liabilities are a factoe Wh parner receive in cash in the liquidation process? ively. Cash balance in 548 noncash asrs $27 ab Problems Set A 17A-1. The partnership of Tammy and Mark began with the partmers inven $3,900 and $2,700, respectively. At the end of the first year, the pe ship earned net income of $7,900. Under each of the following inde pendent situations, calculate how mach of the $7,900 each is enied Situation 1: No agreement on how income was to be shared Situatio” 2; Tammy and Mark share income based on the logan Sitmation 3: Salary allowance of $2,810 to Tammy and $2,410 to Mark of-year investment ratio Ten percent interest on beginning year’s investment. In Situation 3, what would the earnings to each partner be if net inm were $4,700?

## Expert Answer

Part a ) Situation 1 :- When there is no agreement , then profits and losses are shared equally , therefore each partner will receive 7900 / 2 = $ 3950 of the net income.

Situation 2 :- Tammy will receive :- 7900 * 3900/ ( 3900 + 2700) = $ 4668

Mark will receive :- 7900 * 2700 / 6600 = $ 3232

Situation 3:- Fisrt of all salary will be distributed , so remaining profit = 7900 – 2810 – 2410 = $ 2680

Then intt. on capital will be paid , so remaining profit = 2680 – 390 – 270 = $ 2020

Now, this profit will be equally distributed and each partner will receive $ 2020 / 2 = $ 1010 share in net income.

Part b ) If net earning = 4700 , then loss will occur amounting to 4700 – 2810 – 2410 – 390 – 270 = $ 1180

Now, this loss will be equally shared and each partner will bear $ 1180 / 2 = $ 590 share in net loss.