Question

Brown invested $200,000 and freeman invested $150,000 in a partnership. they agreed to an interest allowance on the partners' beginning-year capital investments at 10%, with the balance to be shared equally. under this agreement, the shares of the partners when the partnership earns $205,000 in income are:

Answer 1

Under the partnership agreement, Brown and Freeman made a beginning-year interest amount of $20,500. This is 10% of the beginning-year's profit of $205,000. Given their initial partnership agreement, they will share this amount equally. This would mean that they each received an amount of $10,250.