Question

Fred and Dorothy operate an accounting firm as partners. on 1 March 2020, they admitted a...

Fred and Dorothy operate an accounting firm as partners. on 1 March 2020, they admitted a new partner into their partnership. the terms of the agreement provided that the profits of the partnership be shared equally. The partnership's net income for the year ended 30 june 2020 was $200,000. assume that the net income of the partnership was spread equally over the 12 months.

Fred made a loan of $50,000 to the partnership on 1 may 2020 to fund its working capital. the interest on the loan was 85 per annum. Calculate each partner's share of net income from the partnership.

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Answer #1
Interest Income from Jul to Feb Income from Mar to Jun Total
Fred 666.67 66666.67 22000 89333.33
Dorthy 66666.67 22000 88666.67
New Partner 22000 22000

Income from July to February = 200000 * 8 / 12 = 133333.33

Apportioned between Fred and Dorthy as 133333.33 / 2 = 66666.67 each.

Income from March to June = 200000 * 4 / 12 - ( 50000 * 8% * 2/12) = 66000

Apportioned between Fred and Dorthy and New Partner as 66000 / 3 = 22000 each.

Interest on loan = 50000 * 8% * 2/12 = 666.67

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