Question

Combs and Stratton invested $140,000 and $360,000, respectively, in a partnership. They agreed to share net income in proportion to their investments. If the partnership's net income last year was $43,500, how much was each partners share of the net income?

Answer 1

Comb's share will be = $12,180

Stratton's share will be = $31,320

Explanation:

Given:

Comb's investment in the partnership = $140,000

Stratton's investment in the partnership = $360,000

The net income is shared in proportions of their investment.

Net income last year = $43,500

To find the share of each partner of the net income.

Solution:

Ratio of the investments of Comb to Stratton =
`(140,000)/(360,000)`
`= (14)/(36)=(7)/(18)` (Simplest ratio)

Thus, the investments must be shared in the ratio of 7 : 18

Let Comb's share in dollars be =
`7x`

Then, Stratton's share in dollars =
`18x`

Total net income can be given as =
`7x+18x=25x`

Net income = $43,500

So, we have:

`25x=43,500`

Dividing both sides by 25.

`(25x)/(25)=(43,500)/(25)`

∴
`x=1740`

So, Comb's share will be =
`7* 1740 = \$12,180`

Stratton's share will be =
`18* 1740 = \$31,320`