Matt and Joel Are Equal Partners in the MJ Partnership

question 110

Multiple Choice

Matt and Joel are equal partners in the MJ Partnership. For the current year ended December 31, the partnership has book income of $80,000, which includes the following deductions: (1) guaranteed payments (salaries) to partners: Matt, $35,000; and Joel, $25,000; and (2) charitable contributions, $6,000. The book income amount does not include any sales of capital assets or Sec. 1231 assets or any tax-exempt income. Based on the above information, what amount should be reported as ordinary income on the partnership return?

• A)$60,000
• B)$80,000
• C)$86,000
• D)$140,000

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Definitions:

Time Ticket

A document or electronic record used to track the amount of time an employee spends on various tasks, often for billing or payroll purposes.

Direct Labor

The wages and associated costs for workers directly involved in the production of goods or delivery of services.

Factory Overhead

Factory overhead encompasses all the indirect costs associated with manufacturing, excluding direct materials and direct labor expenses.

Overhead Application Rate

A method for assigning indirect costs to produced goods based on a formula, often related to the level of production activity.