Question

The Muldoon Partnership costs of three partners, Adam, Dawn and Vanderbeck. The partnership agreement provides for annual salaries of $30,000 to Dawn and $40,000 to Vanderbeck. Residual profits are shared in a 3:3:4 ratio respectively. Salaries are to be fully implemented, even if partnership net income is less than total salaries. Assuming that partnership net income is $280,000 ,

Adam’s share of net income is?

Please show working.

Answer 1

Correct Answer:

Adam’s share of net income = $ 63,000

Working:

	Adam	Dawn	Vander beck	Total
Net income				$        2,80,000
Salary		$        30,000	$            40,000	$            70,000
Residual profit				$        2,10,000
remaining share of income in 3:3:4 ratio	$        63,000	$        63,000	$            84,000	$        2,10,000
Total	$        63,000	$        93,000	$        1,24,000	$        2,80,000

End of Answer.

Thanks