Jhumpa, Stewart, and Kelly are all one-third partners in the capital and profits of Firewalker General Partnership. In addition to their normal share of the partnership's annual income, Jhumpa and Stewart each receive an annual guaranteed payment of $10,000 to compensate them for additional services they provide. Firewalker's income statement for the current year reflects the following revenues and expenses:     Sales revenue $340,000 Interest income        3,300 Long-term capital gains        1,200 Cost of goods sold (120,000) Employee wages (75,000) Depreciation expense (28,000) Guaranteed payments (20,000) Miscellaneous expenses (4,500) Overall net income $97,000  (Leave no answer blank. Enter zero if applicable.)b. How will it allocate these amounts to its partners? (Round your intermediate calculations and final answers to the nearest whole dollar amount.)  DescriptionJhumpaStewartKellyGuaranteed payments   Interest income   Long-term capital gain   Self-employment income

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Asked Mar 22, 2020
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Jhumpa, Stewart, and Kelly are all one-third partners in the capital and profits of Firewalker General Partnership. In addition to their normal share of the partnership's annual income, Jhumpa and Stewart each receive an annual guaranteed payment of $10,000 to compensate them for additional services they provide. Firewalker's income statement for the current year reflects the following revenues and expenses:

 

       
Sales revenue   $340,000  
Interest income          3,300  
Long-term capital gains          1,200  
Cost of goods sold   (120,000)  
Employee wages   (75,000)  
Depreciation expense   (28,000)  
Guaranteed payments   (20,000)  
Miscellaneous expenses   (4,500)  
Overall net income   $97,000  
 

(Leave no answer blank. Enter zero if applicable.)

b. How will it allocate these amounts to its partners? (Round your intermediate calculations and final answers to the nearest whole dollar amount.)

 
 
Description Jhumpa Stewart Kelly
Guaranteed payments      
Interest income      
Long-term capital gain      
Self-employment income      
       
       
       
       
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Expert Answer

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Step 1

Compute the ordinary business income:

 

Particulars Amount ($)
Sales revenue $340,000
Less: Cost of goods sold ($120,000)
         Employee wages ($75,000)
         Depreciation expense   ($28,000)
         Guaranteed payments ($20,000)
         Miscellaneous expenses ($4,500)
Ordinary business income (loss) $92,500
...

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