Tanner and Teresa share income and losses in a 2:1 ratio after allowing for salaries of...

Tanner and Teresa share income and losses in a 2:1 ratio after allowing for salaries of $43,500 to Tanner and $62,400 to Teresa. Net income of the partnership is $134,700. Income should be divided as follows:

a.Tanner, $62,700; Teresa, $72,000

b.Tanner, $77,000; Teresa, $57,700

c.Tanner, $57,700; Teresa, $77,000

d.Tanner, $58,700; Teresa, $76,000

Solutions

Expert Solution

Sol. Calculation of Net Profit of Partnership

Net Income of the Partnershipe less- Salary of Tanner Less- Salary of Teresa Net Profit Of Partnershite $ 134,700 $ 43,500 $ 62,400 $ 28,800 Profit distribution Ratio of Tanner and Teresa =2:1

Tanner's share of Profit = $28,800 x 2 /3 =$19,200

Teresa's share of Profit =$28,800 x1/ 3= $9,600

Income of Tanner =>

Salary + Tanner's share of Profit

= $43,500 + $19,200 =$ 62,700

Income of Teresa => Salary + Teresa's share of Profit

=$ 62,400 +$ 9,600= $72,000

So, the Income should be divided as

Tanner, $ 62,700; Teresa, $72,000

option (a.) is correct.

ekkarill92 answered 1 year ago

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