Garcia and Henson formed a partnership on January 2, 2020 and agreed to share profits 90% and 10%, respectively. Garcia contributed capital of P25,000. Henson contributed no capital but has a specialized expertise and manages the firm full time. There were no withdrawals during the year. The partnership agreement provides for the following: • Capital accounts are to be credited annually with interest at 5% of beginning capital. • Henson is to be paid a salary of Pl1,000 a month. Henson is to receive a bonus of 20% of income calculated before deducting his salary, bonus and interest on capital account. • The partnership 2005 income statement as follows: Revenues P 96,450 Expenses (including salary, interest, and bonus) 49,700 Net income P 46,750 What is Henson's 2020 bonus?

Garcia and Henson formed a partnership on January 2, 2020 and agreed to share profits 90% and 10%, respectively. Garcia contributed capital of P25,000. Henson contributed no capital but has a specialized expertise and manages the firm full time. There were no withdrawals during the year. The partnership agreement provides for the following: • Capital accounts are to be credited annually with interest at 5% of beginning capital. • Henson is to be paid a salary of Pl1,000 a month. Henson is to receive a bonus of 20% of income calculated before deducting his salary, bonus and interest on capital account. • The partnership 2005 income statement as follows: Revenues P 96,450 Expenses (including salary, interest, and bonus) 49,700 Net income P 46,750 What is Henson's 2020 bonus?

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter14: Choice Of Business Entity—operations And Distributions

Section: Chapter Questions

Problem 47P

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