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Dividing Partnership Net Income
Required:
Steve Prince and Chelsy Bernard formed a partnership, dividing income as follows:
1. Annual salary allowance to Bernard of $122,100.
2. Interest of 6% on each partner's capital balance on January 1.
3. Any remaining net income divided to Prince and Bernard, 1:2.
Prince and Bernard had $96,000 and $87,000, respectively, in their January 1 capital balances. Net income for the year was $222,000. How much is distributed to Prince and Bernard?
Note: Compute partnership share.
Prince: $
Bernard: $
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Set up a column for each partner and a total column. The amount of net income that should be distributed to each partner should include: the partner's salary allowance, the interest on the partner's capital
balance, and any remaining income divided based on the partnership agreement. If the net income is less than the total of the salary and interest allowances, then the remaining net income to divide is a
negative amount, as though it were a net loss.
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10:29 AM
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