Question

Steve Conyers and Chelsy Poodle formed a partnership, dividing income as follows: Annual salary allowance to Conyers of $97,350. Interest of 5% on each partner's capital balance on January 1. Any remaining net income divided to Conyers and Poodle, 1:2. Conyers and Poodle had $54,000 and $105,000, respectively, in their January 1 capital balances. Net income for the year was $165,000.

How much is distributed to Conyers and Poodle? Note: Compute partnership share.

Answer 1

$119950 is distributed to Steve Conyers while $45050 is distributed to Chelsy Poodle.

Step-by-step explanation:

The Net income will be divided among both partners as follows,

Net Income $165000

Less: Salary

Steve Conyers (97350)

Less: Interest on Capital

Steve Conyers (54000 * 0.05) (2700)

Chelsy Poodle (105000 * 0.05) (5250)

Remaining Income 59700

Share of Remaining Income

Steve Conyers (59700 * 1/3) 19900

Chelsy Poodle (59700 * 2/3) 39800

Total distribution for the year

Steve Conyers = 97350 + 2700 + 19900 = $119950

Chelsy Poodle = 5250 + 39800 = $45050