Question

Tanner and Teresa share income and losses in a 2:1 ratio after allowing for salaries of $42,000 to Tanner and $60,000 to Teresa. Net income of the partnership is $132,000. Income should be divided as follows:
a.Tanner, $58,000; Teresa, $74,000
b.Tanner, $62,000; Teresa, $70,000
c.Tanner, $75,000; Teresa, $57,000
d.Tanner, $57,000; Teresa, $75,000

Answer 1

Answer:

Income of Tanner is $62000

And income of Teresa is $70000

So option (b) will be the correct option

Explanation:

We have given that Tanner and Teresa shares income and losses in a ratio 2:1

We have given that net income of partnership = $132000

Salary of Tanner = $42000

And salary of Teresa = $60000

So total salary = $42000+$60000 = $102000

So profit = $132000-$102000 = $30000

As the profit is shared in ratio 2:1

So profit of tarred = $\frac{2}{3}\times 30000= 20000$

And profit of Teresa = $30000 - $20000 = $10000

So income of Tanner = $42000+$20000 = $62000

And income of Teresa = $60000+$10000 = $70000

So option (b) will be the correct answer