Bob and Jim formed a partnership, investing $750,000 and $220,000 respectively.

Question

Bob and Jim formed a partnership, investing $750,000 and $220,000 respectively. The partnership agreement calls for a return of 6% interest on their original investment, Bob is to have a salary of $80,000 per year, Jim is to have a salary of $120,000 and the rest is divided into the 2:1 ratio. Determine the income distribution if the net income of the partnership for the year is $650,000

                                           Bob's                                   Jims's

Return on investment

salarly

income distribution

total distribution

Explanation / Answer

Bob's income is S = 80,000 x (6/100)

Jim's income is S1 = 120,000 x (6/100)

the total distribution is

dS = 650,000 - S

and dS1 = 650,000 - S1

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