A is corrent. Since the salary allowances are credited to the partners’ accounts before sharing the profits and losses, C will always benefit by $3,000 ($15,000 - $12,000). In the event of a profit situation, C will receive $3,000 additional income. In a loss situation, C’s salary will offset $3,000 additional loss and therefore C will benefit by this amount.
B is incorrect. Since the salary allowances are credited to the partners’ accounts before sharing the profits and losses, C will always benefit by $3,000 ($15,000 - $12,000). In the event of a profit situation, C will receive $3,000 additional income. In a loss situation, C’s salary will offset $3,000 additional loss and therefore C will benefit by this amount.
B is incorrect. Since the salary allowances are credited to the partners’ accounts before sharing the profits and losses, C will always benefit by $3,000 ($15,000 - $12,000). In the event of a profit situation, C will receive $3,000 additional income. In a loss situation, C’s salary will offset $3,000 additional loss and therefore C will benefit by this amount.
D is incorrect. Since the salary allowances are credited to the partners’ accounts before sharing the profits and losses, C will always benefit by $3,000 ($15,000 - $12,000). In the event of a profit situation, C will receive $3,000 additional income. In a loss situation, C’s salary will offset $3,000 additional loss and therefore C will benefit by this amount.
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