Question

Steve Jack and Chelsy Boxer formed a partnership, dividing income as follows: Annual salary allowance to...

Steve Jack and Chelsy Boxer formed a partnership, dividing income as follows: Annual salary allowance to Jack of $103,250. Interest of 6% on each partner's capital balance on January 1. Any remaining net income divided to Jack and Boxer, 1:2.

Jack and Boxer had $66,560 and $75,000, respectively, in their January 1 capital balances. Net income for the year was $175,000. How much is distributed to Jack and Boxer?

Homework Answers

Answer #1
Steve Chelsy total
Jack Boxer
opening capital balance 66,560 75,000
interest6% on opening bal 6% 6%
interest paid 3994 4500 8494
annual salary to Jack 103,250 0 103,250
total paid before net income 111744
net income in ratio of 1:2 21085 42171 63256
total paid . 128329 46671 175000
net income 175000-111,744
63256
distribution to Jack 128329
Distribution to Boxer 46,671
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