Use the following information to answer the next3questions. Partners Curly and L

Question

Use the following information to answer the next3questions. Partners Curly and Larry run a dog grooming business. Each year they distribute profits in the following sequence. · interest at 10% on the average capital balance salaries of S30,000 to Curly, and SI5,000 to Larry balance is distributed equally For 201 Curly had an average capital balance of S20,000 and Larry had an average of S45,000. 14. How much must the business eam without having to distribute a loss equally to the partners? a. S62,500 b. $51,500 c. $65,000 d. $45,000 15. If net income for 20 is S120,000, how much is allocated to Larry? a. $53,750 b. $34,250 c. $60,000 d $62,500 16. If net income for 2011 is S45,000, how much is allocated to Larry? a. $15,000 b. $19,500 c. $16,250 d. $4,500

Explanation / Answer

Question - 14

Inorder, not to have loss, minimum earnings needed = salaries + Interest on capital.

= 30,000 + 15000 + 10%(20000 + 45000) = 51500

Question - 15

Allocation to larry = ( 120000 - 51500) / 2 + 15000 + 4500 = 34250 + 19500 = 53750

Question - 16

Allocation to larry = ( 45000 - 51500) / 2 + 15000 + 4500 = 16250

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