Question

Joe and Jim form a partnership on 01/01/2019. The written partnership agreement calls for cash contributions of $45,000 and $55,000, respectively, on 01/01/2019. Yearly salaries are to be paid in the amounts of $120,000 and $80,000, respectively. Net income/loss is to be divided as follows: In addition to the salaries paid to the two partners, an interest allowance of 10% per year is to be paid on the partners' capital balance at the beginning of the year, after which the remaining amount is to be split evenly. At 12/31/2019, Jim's share of a net income of $280,000 will be

Answer 1

Solution:

Jim's share of net income = $120,500