Question

Ramer and Knox began a partnership by investing $ 60,000 and $ 80,000, respectively. The partners agreed to share net income and loss by granting annual salary allowances of $ 50,000 to Ramer and $ 40,000 to Knox, 10 % interest allowances on their investments, and any remaining balance shared equally.

1. Determine the partners' shares of Ramer and Knox given a first-year net income of $ 98,800.

2. Determine the partners' shares of Ramer and Knox given a first-year net loss of $ 16,800.

Answer 1

1)

	ramer	knox
to salary	50000	40000	90000	by net income	98800
interest on investment	6000	8000	14000	by net loss	5200
total			104000	total	104000
to net loss(equally)	2600	2600	5200

2) if it is net loss ,then should divide equally and no salary and  interest allowable.hence share will be 8400 each