Question

Partner A has a capital balance of $20,000 and devotes full time to the partnership. Partner B has a capital balance of $30,000 and devotes half time to the partnership. If no other information is available regarding distributions, in what ratio is net income to be divided?
1. 3:5
2. 1:1
3. 2:3
4. 1:2

Answer 1

Answer:

The ratio of net income distribution

= $20,000: $30,000

= 2:3

Explanation:

The ratio of income distribution is the ratio of capital contributed by each partner. A contributes $20,000 while B contributes $30,000. The ratio of net income distribution is 2:3.