Question

Dividing Partnership Net Income Required: Steve Prince and Chelsy Dane formed a partnership, dividing income as follows: 1. Annual salary allowance to Prince of $132,000. 2. Interest of 6% on each partner's capital balance on January 1. 3. Any remaining net income divided to Prince and Dane, 1:2. Prince and Dane had $63,000 and $93,000, respectively, in their January 1 capital balances. Net income for the year was $240,000. How much is distributed to Prince and Dane? Note: Compute partnership share. Prince: $ х Dane: $ 65,760 X

Answer 1

Answer
Supporting calculations	Prince	Chelsy	Total
a. Net income			$2,40,000
b. Salary allowance	$ 1,32,000		$-1,32,000
c. Balance after salary allowance			$1,08,000
d. Interest allowance (6%)	$       3,780	$       5,580	$    -9,360
	(63000*6%)	(93000*6%)
e. Balance after interest and salaries			$    98,640
f. Balance allocated 1:2	$     32,880	$     65,760
g. Total Share of the partners	$ 1,68,660	$     71,340	$2,40,000