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21 January, 00:31

Leigh Meadows and Byron Leef formed a partnership in which the partnership agreement provided for salary allowances of $35,000 and $25,000, respectively. Determine the division of a $20,000 net loss for the current year, assuming remaining income or losses are shared equally by the two partners. Use the minus sign to indicate any deductions or deficiencies.

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  1. 21 January, 03:35
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    Leigh is responsible for $5,000 in losses, and Byron for $15,000 in losses.

    Explanation:

    Since both income and losses are shared equally, we must first determine the partnership's total income:

    Leigh Byron Total

    salaries $35,000 $25,000 $60,000

    net loss = income - total costs

    -$20,000 = $60,000 - total costs

    total costs = $60,000 + $20,000 = $80,000

    divided by the 2 partners:

    Leigh Byron Total

    salaries $35,000 $25,000 $60,000

    costs - $40,000 - $40,000 - $80,000

    net loss - $5,000 - $15,000 - $20,000
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