Lori and Mike Enter into a Partnership and Decide to Share

question 153

Multiple Choice

Lori and Mike enter into a partnership and decide to share profits and losses as follows: 1.The first allocation is a salary allowance with Lori receiving $12,000 and Mike receiving $25,000.
2) The second allocation is 20% of the partners' capital balances at year end.On December 31,2019,the capital balances for Lori and Mike are $86,000 and $344,000,respectively.
3) Any remaining profit or loss is allocated equally.
For the year ending December 31,2019,the partnership reported a net loss of $122,000.The journal entry to record the loss allocation will ________.

• A) debit Lori, Capital for $93,300
• B) debit Lori, Capital for $28,700
• C) debit Mike, Capital for $93,800
• D) credit Mike, Capital for $93,800

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Definitions:

Zero-coupon Bond

A debt security that does not pay interest but is traded at a deep discount, rendering profit at maturity when the bond is redeemed for its face value.

Semi-annually

Occurring twice a year.

Effective Annual Yield

Annualized interest rate on a security computed using compound interest techniques.

Yield Curve

A graph that shows the relationship between the interest rates and the maturity dates of debt securities issued by the same issuer.