Nancy and Peter Enter into a Partnership and Decide to Share

question 16

Multiple Choice

Nancy and Peter enter into a partnership and decide to share profits and losses as follows: 1.The first allocation is a salary allowance with Nancy receiving $13,000 and Peter receiving $11,000.
2) The second allocation is 15% of the partners' capital balances at year end.On December 31,2019,the capital balances for Nancy and Peter are $82,000 and $18,000,respectively.
3) Any remaining profit or loss is allocated equally.
For the year ending December 31,2019,the partnership reported a net loss of $147,000.What is Peter's share of the net loss?

• A) $13,700
• B) $54,000
• C) $5800
• D) $67,700

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Definitions:

Short Run

A period during which at least one of a firm's inputs is fixed, limiting its capacity to adjust to changes in demand.

TC

Total Costs, the sum of all costs incurred in the production of goods or services.

TR

Total Revenue; the total receipts from sales of goods or services provided by a company before any deductions are made.

TVC

Total Variable Cost; the total of all costs that vary with the level of output produced by a company.