Question

Dividing Partnership Net Income Required: Steve King and Chelsy Stevens formed a partnership, dividing income as follows: Annual salary allowance to King of $101,750. Interest of 7% on each partner's capital balance on January 1. Any remaining net income divided to King and Stevens, 1:2. King and Stevens had $77,600 and $90,040, respectively, in their January 1 capital balances. Net income for the year was $185,000. How much is distributed to King and Stevens? Note: Compute partnership share to two decimal places. Round final answers to the nearest whole dollar.

King: $

Stevens: $

Answer 1

• Workings

	Steve King	Chelsy Stevens	NET INCOME
			Net Income Distributed	Undistributed balance
Net Income Balance				$        185,000.00
Salary Allowance	$          101,750.00	$                          -	$        101,750.00	$          83,250.00
Interest on Capital	$              5,432.00	$             6,302.80	$           11,734.80	$          71,515.20
Remaining Net Income	$            23,838.40	$           47,676.80	$           71,515.20	$                          -
Total Distribution	$          131,020.40	$           53,979.60

• Requirements

>King = $ 131,020

>Stevens = $ 59,980