Question

Xavier and Yolonda have original investments of $100,000 and $50,000 respectively in a partnership. The articles of partnership include the following provisions regarding the division of net income: interest on original investment at 15%, salary allowances of $22,000 and $20,000 respectively, and the remainder equally. If the business has a net income of $90,000, how much of that should be allocated to Xavier?

Answer 1

Answer:

Total of Xavier's share = $49750

Explanation:

The allocation of net income to both Xavier and Yolonda will be as follows,

Net Income                              90000

Interest on Capital:

Xavier(0.15 * 100000)      15000  

Yolonda(0.15 * 50000)      7500   (22500)

                                              67500

Salary:  

Xavier                           22000  

Yolonda                           20000      (42000)

                                               25500

Share of remaining profit:  

Xavier                             12750  

Yolonda                             12750        25500

Total of Xavier's share = 15000 + 22000 + 12750  = $49750