Question

Dividing Partnership Net Income

Required:

Steve Prince and Chelsy Boxer formed a partnership, dividing income as follows:

1. Annual salary allowance to Boxer of $100,890.
2. Interest of 6% on each partner's capital balance on January 1.
3. Any remaining net income divided to Prince and Boxer, 1:2.

Prince and Boxer had $93,000 and $99,000, respectively, in their January 1 capital balances. Net income for the year was $171,000. How much is distributed to Prince and Boxer?

Note: Compute partnership share.
Prince: $
Boxer: $

Answer 1

Solution:

Particulars	Steve Prince	Chelsy Boxer	Total
Net income			$171,000
Salary	0	$100,890	$100,890
Interest	$5,580($93,000 ×6%)	$5,940($99,000 × 6%)	$11,520
Remaining income			$58,590
Income share	$19,530($58,590 × 1/3)	$39,060($58,590 × 2/3)	$58,590
Allocated share	$25,110	$145,890	$171,000

Partnership's share:

Steve Prince =$25,110

Chelsy Boxer =$145,890