Question

Christie and Jergens formed a partnership with capital contributions of $360,000 and $460,000, respectively. Their partnership agreement calls for Christie to receive a $66,000 per year salary. Also, each partner is to receive an interest allowance equal to 10% of a partner's beginning capital investments. The remaining income or loss is to be divided equally.

Required:
a. If the net income for the current year is $153,000, then Christie and Jergens's respective shares are ___________.
O $104,500; $48,500.
O $102,000; $46,000.
O $76,500; $76,500.
O $41,000; $112,000.
O $67,171; $85,829.

Answer 1

Christie's share is $104500 while Jergens share is $48500. Thus, the first option is the correct answer.

Step-by-step explanation:

The appropriation of net income among the partners will be as follows,

$ $

Net Income $153000

Less: Salary to Partner

Christie (66000)

Less:Interest on Capital

Christie 36000

Jergens 46000 (82000)

Remaining Profit 5000

Distribution of Remaining Profit

Christie (5000/2 = 2500) 2500

Jergens (5000/2 =2500) 2500

Christie's Share = 66000 + 36000 + 2500 = $104500

Jergen's share = 46000 + 2500 = $48500