Question

Steve Conyers and Chelsy Boxer formed a partnership, dividing income as follows: Annual salary allowance to Boxer of $145,350. Interest of 5% on each partner's capital balance on January 1. Any remaining net income divided to Conyers and Boxer, 1:2. Conyers and Boxer had $66,560 and $112,600, respectively, in their January 1 capital balances. Net income for the year was $255,000. How much is distributed to Conyers and Boxer? Note: Compute partnership share to two decimal places. Round final answers to the nearest whole dollar.

Answer 1

Distribution of Profit
	Conyers	Boxer	Total
Profit earned			$      255,000.00
Salary		$    145,350.00	$    (145,350.00)
Interest on Capital	$      3,328.00	$         5,630.00	$        (8,958.00)
Profit Balance left for Distribution			$      100,692.00
Balance distribution in ratio of 1:2	$    33,564.00	$       67,128.00	$    (100,692.00)
Total Distribution	$          36,892	$          218,108	$            255,000

Partner’s Capital Accounts

	Conyers	Boxer
Capital Balance	$          66,560	$          112,600
Total Distribution	$          36,892	$          218,108
Ending Balance	$        103,452	$          330,708