Question

Partners Cantor and Dickens have capital balances in a partnership of $160,000 and $240,000, respectively. They agree to share profits and losses as follows:

Cantor Dickens
As salaries $40,000 $48,000
As interest on capital at the beginning of the year 10% 10%
Remaining profits or losses 50% 50%
If income for the year was $120,000, what will be the distribution of income to Cantor?

A. $40,000
B. $52,000
C. $64,000
D. $56,000

Answer 1

B. $52,000

Step-by-step explanation:

Income fot the year $120,000

Less: C salaries $40,000

Less: D salaries $48,000

Less: Interest on Capital to C $16,000 (10% * $160,000)

Less: Interest on Capital to C $24,000 (10% * $240,000)

Loss $8,000

Distribution of income

Salaries $40,000

Add: Interest on Capital $16,000 (10% * $160,000)

Less: Remaining loss he share ($4,000) (50% * 80,00)0

Distribution of income to C $52,000