Question

Emerson and Dakota formed a partnership dividing income as follows: 1. Annual salary allowance to Emerson of $43,600 2. Interest of 10% on each partner's capital balance on January 1 3. Any remaining net income divided equally. Emerson and Dakota had $35,600 and $127,200, respectively, in their January 1 capital balances. Net income for the year was $226,400. How much net income should be distributed to Dakota?

Answer 1

Distribution to Dakota = $95,980

Working

	Emerson	Dakota
Opening Capital Year 2018	$   35,600.00	$    127,200.00
Add: Salary	$   43,600.00
Interest on capital	$      3,560.00	$      12,720.00
Remaining profit (226400-43600-16280)	$   83,260.00	$      83,260.00
Total distribution	$ 130,420.00	$      95,980.00