Rhonda Has a 30% Interest in the Capital and Profits

question 99

True/False

Rhonda has a 30% interest in the capital and profits of the ABC Partnership.Her share of the profits for 2012 was $90,000.She withdrew $40,000 from the partnership in 2012.In January 2013, after her share of the profits for 2012 had been computed, she withdrew her remaining $50,000 share of 2012 profits.As a result, Rhonda must recognize $40,000 of gross income in 2012 and $50,000 in 2013.

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Definitions:

Retained Earnings

Part of a company's profit that is held or retained and saved for future use, reinvestment, or to pay debt rather than being paid out as dividends to shareholders.

Common Stock

A type of security that represents ownership in a corporation, entitling the holder to vote on corporate matters and receive dividends.

Statement of Stockholders' Equity

A financial statement that shows changes in the value of a company's shareholders' equity over a specific period through items such as net income, dividend payments, and share repurchases.

Common Stock

A type of security that represents ownership in a corporation, giving holders a share of the profits in the form of dividends.