Question

Steve Queen and Chelsy Bernard formed a partnership, dividing income as follows: Annual salary allowance to Queen of $159,300. Interest of 5% on each partner's capital balance on January 1. Any remaining net income divided to Queen and Bernard, 1:2. Queen and Bernard had $88,640 and $105,080, respectively, in their January 1 capital balances. Net income for the year was $270,000. How much is distributed to Queen and Bernard?

Answer 1

• All working forms part of the answer
• Working

	Steve Queen	Chelsy Bernard	NET INCOME
			Net Income Distributed	Undistributed balance
Net Income Balance				$        270,000.00
Salary Allowance	$          159,300.00		$        159,300.00	$        110,700.00
Interest on Capital	$              4,432.00 [88640 x 5%]	$             5,254.00 [105080 x 5%]	$             9,686.00	$        101,014.00
Remaining Net Income	$            33,671.33 [101014 x 1/3]	$           67,342.67 [101014 x 2/3]	$        101,014.00	$                          -
Total Distribution	$          197,403.33	$           72,596.67

• Amount distributed to:

Steve Queen = $ 197,403.33

Chelsy Bernard = $ 72,596.67