Question

Nguyen invested $8,000 and Hansen invested $12,000 in a partnership. They agreed to share incomes and losses by allowing a $9,000 per year salary allowance to Nguyen and a $12,000 per year salary allowance to Hansen, plus interest on the partners' investments at 10%, with the balance to be shared equally. Under this agreement, the shares of the partners with a $51,000 profit are:

Answer 1

	Nguyen	Hansen	Total
Salary allowance	9,000	12,000	21,000
Interest allowance	800	1,200	2,000
Total	9,800	13,200	23,000
Remaining income	14,000	14,000	28,000
Total	23,800	27,200	51,000

net income = $51,000

Interest allowance to Nguyen = 8,000 x 10%

= $800

Interest allowance to Hansen= 12,000 x 10%

= $1,200

Remaining income after salary and interest allowance = Net income - Salary allowance - Interest allowance

= 51,000-9,000-12,000-800-1,200

= $28,000

Nguyen share of remaining income = 28,000 x 1/2

= $14,000

Nguyen share of remaining Hansen= 28,000 x 1/2

= $14,000

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