B is corrent because each partner withdrew 80% of his/her salary during the year, leaving his/her equity interest to increase by the remaining 20% plus half of the net profit after salaries. Since Mayo’s salary is $10,000 greater than Pack’s, Mayo’s equity interest will increase by $2,000 (20% of $10,000) more than Pack’s.
A is incorrect. Each partner withdrew 80% of his/her salary during the year, leaving his/her equity interest to increase by the remaining 20% plus half of the net profit after salaries. Since Mayo’s salary is $10,000 greater than Pack’s, Mayo’s equity interest will increase by $2,000 (20% of $10,000) more than Pack’s.
C is incorrect. Each partner withdrew 80% of his/her salary during the year, leaving his/her equity interest to increase by the remaining 20% plus half of the net profit after salaries. Since Mayo’s salary is $10,000 greater than Pack’s, Mayo’s equity interest will increase by $2,000 (20% of $10,000) more than Pack’s.
D is incorrect. Each partner withdrew 80% of his/her salary during the year, leaving his/her equity interest to increase by the remaining 20% plus half of the net profit after salaries. Since Mayo’s salary is $10,000 greater than Pack’s, Mayo’s equity interest will increase by $2,000 (20% of $10,000) more than Pack’s.
|
