Answer:
The Christie and Jergens's respective shares are $92,500 and $42,500.
Explanation:
For computing the Christie and Jergens's respective shares, first, we have to compute the remaining income which is to be shared between these two partners. The computation is shown below:
= Net income - salary - interest on total capital
= $135,000 - $60,000 - 10% × ($300,000 + $400,000)
= $135,000 - $60,000 - $70,000
= $5,000
So, the remaining income would be divided equally between the partners
Now
Christie shares = Salary + interest on capital + remaining income
= $60,000 + ($300,000 × $10%) + $2,500
= $60,000 + $30,000 + $2,500
= $92,500
And, the Jergens shares = interest on capital + remaining income
= ($400,000 × $10%) + $2,500
= $40,000 + $2,500
= $42,500
