Question

Turner and Isham agreed to form a partnership. Turner contributed $ 200,000 in cash, and Isham contributed assets with a fair market value of $ 400,000. The partnership, in its initial year, reported net income of $ 120,000. Assume that the partnership agreement states that Turner and Isham are to receive salaries of $ 20,000 and $ 24,000, respectively; that Turner is to receive 6 percent interest on his capital balance at the beginning of the year; and that the remainder of income and losses are to be shared equally. Calculate the distribution of the income or losses under the following conditions:
1.Income totals $ 120,000.
2.Income totals $ 48,000.
3.There is a loss of $ 2,000.
4.There is a loss of $ 40,000.