Question

Dividing Partnership Net Income Required: Steve Queen and Chelsy Stevens formed a partnership, dividing income as follows: Annual salary allowance to Queen of $92,400. Interest of 6% on each partner's capital balance on January 1. Any remaining net income divided to Queen and Stevens, 1:2. Queen and Stevens had $45,000 and $111,000, respectively, in their January 1 capital balances. Net income for the year was $165,000. How much is distributed to Queen and Stevens?

Note: Compute partnership share.

Queen: $

Stevens: $

Answer 1

	Queen	Stevens	Balance to be distributed
Net income			$      1,65,000
Distributions:
Annual salary	$            92,400	$                   -	$        -92,400
Interest on capital	$              2,700	$            6,660	$          -9,360
Balance to be distributed			$          63,240
Balance distributed in the rate of 1:2	$            21,080	$          42,160	$        -63,240
Share in partnership income	$        1,16,180	$          48,820	$                   -