Question Continuation
Complete the schedule showing the distribution of net income, assuming net income is $54,000
Answer:
McGill takes $31,540
Smyth takes $22,460
Total: $54,000
Explanation:
Salary Allowance
McGill: $19,000
Smyth: $14,000
Total Salary Allowance = $33,000
Interest Allowance
McGill: $54,000 x 10% = $5,400
Smyth: $48,000 x 10% = $4,800
Total Interest Allowance = $5400 + $4,800 = $10,200
Total salaries and interest
McGill =$24,400 ($19,000 + $5,400)
Smyth: $18,800 ($14,000 + $4,800)
Sum = $43,200
Remaining income
McGill = $10,200 x 70% = $7,140
Smyth: $10,200 x 30% = $3,060
Total division between McGill and Smyth
McGill takes $31,540
Smyth takes $22,460
Total: $54,000
