Question

Xavier and Yolonda have original investments of $100,000 and $50,000 respectively in a partnership. The articles of partnership include the following provisions regarding the division of net income: interest on original investment at 15%, salary allowances of $22,000 and $20,000 respectively, and the remainder equally. If the business has a net income of $90,000, how much of that should be allocated to Xavier?

Answer 1

Total of Xavier's share = $49750

Step-by-step explanation:

The allocation of net income to both Xavier and Yolonda will be as follows,

Net Income 90000

Interest on Capital:

Xavier(0.15 * 100000) 15000

Yolonda(0.15 * 50000) 7500 (22500)

67500

Salary:

Xavier 22000

Yolonda 20000 (42000)

25500

Share of remaining profit:

Xavier 12750

Yolonda 12750 25500

Total of Xavier's share = 15000 + 22000 + 12750 = $49750