Question

Partners Conner, Tuitt, and Heyward share profits and losses in a 3:4:5 ratio, respectively.  Their average capital balances for the quarter year were $50,000, $70,000, and $80,000, respectively.
Conner and Heyward each receive a “salary” of $8,000 each quarter due to their years of experience
in the field.  All three partners receive 5% interest on their average capital balance.  The net income
for this quarter was $25,100.
Prepare a schedule that shows the distribution of the net income to the partners.

Answer 1

	Conner	Tuitt	Heyward	Total/Balance
Net income for the quarter				$           25,100
Salary allowed	$               8,000	$                     -	$             8,000	$           16,000
Balance to be distributed	$                      -	$                     -	$                    -	$              9,100
Interest at the rate of 5% on average capital	$               1,000	$              1,400	$             1,600	$              4,000
Balance to be distributed				$              5,100
Shared in the ratio of 3:4:5	$               1,275	$              1,700	$             2,125	$              5,100
Balance to be distributed				$                     -
Total distributed	$             10,275	$              3,100	$          11,725	$           25,100