Dividing Partnership Net Income Required: Steve Conyers and Chelsy Poodle formed
ID: 2405591 • Letter: D
Question
Dividing Partnership Net Income Required: Steve Conyers and Chelsy Poodle formed a partnership, dividing income as follows: Annual salary allowance to Poodle of $99,000. Interest of 6% on each partner's capital balance on January 1. Any remaining net income divided to Conyers and Poodle, 1:2. Conyers and Poodle had $50,000 and $97,560, respectively, in their January 1 capital balances. Net income for the year was $180,000. How much is distributed to Conyers and Poodle? Note: Compute partnership share to two decimal places. Round final answers to the nearest whole dollar. Conyers: $ Poodle: $
Explanation / Answer
Calculation of distribution of net income to Conyers and Poodle Net Income Conyers Poodle $180,000.00 Salary allowance -$99,000.00 $99,000.00 Interest on capital - 6% of $50000 -$3,000.00 $3,000.00 - 6% of $97560 -$5,853.60 $5,853.60 Distribution of Balance net Income in 1:2 ratio $72,146.40 - ($72146.40/3) * 1 -$24,048.80 $24,048.80 - ($72146.40/3) * 2 -$48,097.60 $48,097.60 Total Distribution $0.00 $27,048.80 $152,951.20 Conyers share $27,049 Poodle share $152,951