Hay, Straw and Clover formed the HSC Partnership, agreeing to share profits and losses equally. Clover will manage the business for which he will receive a guaranteed payment of $30,000 per year. Cash receipts and disbursements for the year were as follows:Net income from operations (before guaranteed payment) - $ 90,000 Guaranteed payment to clover - 30,000 What is clover's share of the partnership's ordinary income and guaranteed payment?A. Ordinary income, $30,000; Guaranteed payment, $10,000
B. Ordinary income, $20,000; Guaranteed payment, $10,000
C. Ordinary income, $30,000; Guaranteed payment, $30,000
D. Ordinary income, $20,000; Guaranteed payment, $30,000

D. Ordinary Income: $20,000 , Guaranteed payment: $30,000

Explanation:

Ordinary Income refers to that part of income which is classified under salaries, wages or net income in case of Partnership. Such income is taxable at ordinary rates.

Net income refers to income arrived at after deduction of all expenses and taxes from profits. In case of partnership, profits and losses are distributed in agreed profit sharing ratio as per the clause in partnership deed.

In the given case,

Net Income before adjusting guaranteed payment to Clover: $90,000

Less: Guaranteed payment to Clover:                                       ($30,000)

Ordinary Income/Net Income for all 3 partner's                       $60,000

Clover's share in ordinary income is one third i.e                   $20,000

Clover's guaranteed payment                                                    $30,000

steering wheels are always situated on the left side of the car.

always drive on the right side of the road.

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hashed or broken lines means you may change lanes when it is safe.

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it is mandatory to pull over or stop at an intersection to allow an emergency vehicle to pass you if you see one traveling with lights flashing and/or a siren running.

do not overuse your car horn. horns are used almost exclusively for emergency situations or for when you feel unsafe.

explanation:

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