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Steve Conyers and Chelsy Poodle formed a partnership, dividing income as follows: Annual salary allowance to Conyers of $97,350. Interest of 5% on each partner's capital balance on January 1. Any remaining net income divided to Conyers and Poodle, 1:2. Conyers and Poodle had $54,000 and $105,000, respectively, in their January 1 capital balances. Net income for the year was $165,000.
How much is distributed to Conyers and Poodle? Note: Compute partnership share.

Respuesta :

Shahzaibfaraz

Answer:

$119950 is distributed to Steve Conyers while $45050 is distributed to Chelsy Poodle.

Explanation:

The Net income will be divided among both partners as follows,

Net Income                                                     $165000

Less: Salary

 Steve Conyers                                                (97350)

Less: Interest on Capital

 Steve Conyers (54000 * 0.05)                        (2700)

 Chelsy Poodle (105000 * 0.05)                       (5250)

Remaining Income                                            59700

Share of Remaining Income

 Steve Conyers (59700 * 1/3)                           19900

 Chelsy Poodle (59700 * 2/3)                          39800

Total distribution for the year

Steve Conyers  =  97350 + 2700 + 19900  = $119950

Chelsy Poodle = 5250 + 39800  =  $45050

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