Question

Xavier and Yolanda have original investments of $49,400 and $107,600, respectively, in a partnership. The articles of partnership include the following provisions regarding the division of net income: interest on original investment at 20%; salary allowances of $26,100 and $31,800, respectively; and the remainder to be divided equally. How much of the net income of $118,100 is allocated to Yolanda?

a.$21,520

b.$81,264

c.$53,320

d.$67,720

Answer 1

Firstly, let us calculate the amount remaining in net income after providing for interest and salary, which will be divided between the partners equally :

Particulars	Amount
Net Income	118,100
( - ) Salary Paid : Xavier Yolanda	(26,100) (31,800)
( - ) Interest on Capital : Xavier (20% of 49,400) Yolanda (20% of 107,600)	(9,880) (21,520)
Net Income Remaining which is to be divided equally between partners	28,800

Amount of Net Income Allocated to Yolanda = Salary Allowance + Interest on original Investment + Share in remainder of Net Income

= 31,800 + 21,520 + 1/2 * 28,800

= 31,800 + 21,520 + 14,400

= $ 67,720