Asked by Ashley Stokes on Jun 24, 2024
Verified
Emerson and Dakota formed a partnership dividing income as follows:?
1. Annual salary allowance to Emerson of $58,000
2. Interest of 8% on each partner's capital balance on January 1
3. Any remaining net income divided equally?Emerson and Dakota had $25,000 and $140,000, respectively, in their January 1 capital balances. Net income for the year was $220,000.?How much net income should be distributed to Dakota?
Salary Allowance
A fixed amount or benefit often added to an employee's salary, such as for travel or housing.
Capital Balance
The amount of money that shareholders have contributed to a company plus retained earnings or minus accumulated losses.
Net Income
What a business financially gains in the end, after subtracting expenses and taxes from its initial revenue.
- Compute the allocation of net profits in a partnership according to various agreements.
Verified Answer
DM
Daniel MoranJun 29, 2024
Final Answer :
? Sal ary $0 Interest (8%×$140,000)11,200 Remaining income 74,400∗ Total distribution to Emerson $85,600‾\begin{array}{ll}\text { Sal ary } & \$ 0 \\\text { Interest }(8 \% \times \$ 140,000) & 11,200 \\\text { Remaining income } & 74,400^{*} \\\text { Total distribution to Emerson } & \underline{\mathbf{\$ 8 5 , 6 0 0}}\end{array} Sal ary Interest (8%×$140,000) Remaining income Total distribution to Emerson $011,20074,400∗$85,600 * ($220,000 - $58,000 - $2,000 - $11,200) × 50% = $74,400
Learning Objectives
- Compute the allocation of net profits in a partnership according to various agreements.
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