# Roberto and reagan are both 25 percent owner/managers for bright light inc. roberto runs the retail store in sacramento, ca, and reagan runs the retail store in san francisco, ca. bright light inc. generated a $125,000 profit companywide made up of a $75,000 profit from the sacramento store, a ($25,000) loss from the san francisco store, and a combined $75,000 profit from the remaining stores. if bright light inc. is an s corporation, how much income will be allocated to roberto?

$31,250

Explanation:

Since w know that the total profit which is generated by Bright Light Inc. is $125,000 and the share of Robert and Reagan is 25% in Bright Light Inc.

So, if we compute the Robert income it would be equal to

= Total Profit × ownership percentage

= $125,000 × 25%

= $31,250

Since the Robert income is based on the ownership pattern that's why we compute it by considering ownership share.

net income of Reagan = $5000

Explanation:

given data

profit companywide = $125,000

profit from the Sacramento = $75,000

loss from the San Francisco = $25,000

profit from the remaining stores = $75,000

to find out

how much income will be allocated to Reagan

solution

we know that Reagan's Profit From own store is 25,000 and 70% belongs to them only

so here profit to be distributed on pro rata basis will be as

profit to be distributed = $75000 + 30% of Roberto profit - 30% of Reagan profit 1

profit to be distributed = $75000 + 30% × $75,000 - 30% × $25,000

profit to be distributed = $90000

and here share of Reagan is = 25% of $90000

share of Reagan = $22500

so net income of Reagan will be here as

net income of Reagan = $22500 - 70% of 25000

net income of Reagan = $5000