Required information Problem 20-61 (LO 20-4) [The following information applies

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Required information

Problem 20-61 (LO 20-4)

[The following information applies to the questions displayed below.]

The partnership agreement of the G&P general partnership states that Gary will receive a guaranteed payment of $13,000, and that Gary and Prudence will share the remaining profits or losses in a 45/55 ratio. For year 1, the G&P partnership reports the following results:

(Negative amounts should be indicated by a minus sign.)

Problem 20-61 Part-a

a-1. How much ordinary income (loss) is allocated to Gary for the year?

a-2. Compute Gary's share of separately stated items to be reported on his year 1 Schedule K-1, including his self-employment income (loss).

Sales revenue $ 79,200 Gain on sale of land (§1231) $ 7,650 Cost of goods sold $ (37,200 ) Depreciation—MACRS $ (18,400 ) Employee wages $ (14,700 ) Cash charitable contributions $ (4,100 ) Municipal bond interest $ 3,400 Other expenses $ (5,600 )

Explanation / Answer

Computation of G&P Genral Partnership Income Sales Revenue $79,200 Less: Cost og Goods Sold $37,200 Depreciation $18,400 Wages $14,700 Other expense $5,600 Gurrented Paymnet $13,000 $88,900 Ordinary income( Loss) -$9,700 a-1. Computation of allocated ordinary income (Loss) to Gray Gay's Share of Ordinary Loss ( -$9700*45/100)= ($4365) a.2. Computation of Gray's share of Seperated Item Gurrented Payment $13,000 Net Income($13000-$4365) $8,635

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