The partnership agreement of Jones, King,and Lane provides for the annual allocationof the business's profit or loss in thefollowing sequence:Jones, the managing partner, receives abonus equal to 25 percent of the business'sprofit. Each partner receives 19 percentinterest on average capital investment. Anyresidual profit or loss is divided equally.The average capital investments for 2021were as follows:Jones $ 125,000King 250,000Lane 375,000The partnership earned $58, 000 net incomefor 2021. Prepare a schedule showing howthe 2021 net income should be allocatedto the partners. (Loss amounts should beindicated with a minus sign.)

Step 1:Calculation of bonus of jonesNet profit* bonus rate = $58,000*25% =$14,500 Calculation of…

Answered: The partnership agreement of Jones,…

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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