Question

Ramer and Knox began a partnership by investing $60,000 and $90,000, respectively. 2. The partners agreed...

Ramer and Knox began a partnership by investing $60,000 and $90,000, respectively.

2. The partners agreed to share income and loss in proportion to their initial investments.  Net income is $160,000. (Do not round intermediate calculations.

Fraction to Allocate Ramer Ramer's Share of Income Fraction to Allocate Knox Knox's Share of Income Total Income Allocated
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Answer #1

When forming a partnership, the business owners have the option of creating an agreement that dictates how profits or losses pass through to members of the partnership. Absent an agreement, the partners will share profits and losses equally. If an agreement exists, partners divide profits based on the terms specified.

Particulars Ramer Knox Total
Investment 60000 90000 150000

Net Income Share

 64000 96000 160000
Fraction to allocate 2 3

Fraction to allocate = Ramer : Knox = 2:3

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