The profit of the Miskell and Leblanc partnership is $30,000. The partnership agreement specifies that Miskell and Leblanc have a salary allowance of $8,000 and $12,000, respectively. The partnership agreement also specifies an interest allowance of 10% on capital balances at the beginning of the year. Each partner had a beginning capital balance of $20,000. Any remaining profit or loss is shared equally.
-What is Miskell's share of the $30,000 profit?
A) $8,000
B) $10,000
C) $11,000
D) $13,000

Question

Quizplus · Accepted Answer

Miskell's share is calculated as follows: Salary allowance of $8,000 + Interest on capital ($20,000 * 10% = $2,000) + Remaining profit (after salary and interest allowances, $30,000 - $20,000 - $4,000 = $6,000, divided equally, so $3,000 for Miskell). Total = $8,000 + $2,000 + $3,000 = $13,000.

The Profit of the Miskell and Leblanc Partnership Is $30,000