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: $

Answer 1

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