Hay, Straw and Clover Formed the HSC Partnership, Agreeing to Share

question 5

Multiple Choice

Hay, Straw and Clover formed the HSC Partnership, agreeing to share profits and losses equally. Clover will manage the business for which he will receive a guaranteed payment of $30,000 per year. Cash receipts and disbursements for the year were as follows
Net income from operations (before guaranteed payment) $ 90,000
Guaranteed payment to Clover 30,000
What is Clover's share of the partnership's ordinary income and guaranteed payment?

• A) Ordinary income, $30,000; Guaranteed payment, $10,000.
• B) Ordinary income, $20,000; Guaranteed payment, $10,000.
• C) Ordinary income, $30,000; Guaranteed payment, $30,000.
• D) Ordinary income, $20,000; Guaranteed payment, $30,000.

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