Roberto and Reagan Are Both 25 Percent Owner/managers for Bright

question 79

Multiple Choice

Roberto and Reagan are both 25 percent owner/managers for Bright Light Enterprises. Roberto runs the retail store in Sacramento, CA, and Reagan runs the retail store in San Francisco, CA. Bright Light generated a $125,000 profit companywide made up of a $75,000 profit from the Sacramento store, a ($25,000) loss from the San Francisco store, and a combined $75,000 profit from the remaining stores. If Bright Light is taxed as a partnership and decides that Roberto and Reagan will be allocated 70 percent of his own store's profit with the remaining profits allocated pro rata among all the owners, how much income will be allocated to Reagan?

• A) ($25,000)
• B) ($17,500)
• C) $5,000
• D) $20,000

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Definitions:

Operating Activities

Activities directly related to the primary operations of a business, including production, sales, and delivery of services.

Net Cash Provided

The amount of cash generated by a company's operations after accounting for outflows and inflows.

Cash Account

An account that shows the amount of cash a company has on hand or in the bank.

Cash Dividends

Profit distributions paid out by a corporation to its shareholders.