Question

Steve Conyers and Chelsy Poodle formed a partnership, dividing income as follows: Annual salary allowance to Poodle of $146,160. Interest of 6% on each partner's capital balance on January 1. Any remaining net income divided to Conyers and Poodle, 1:2. Conyers and Poodle had $54,000 and $93,000, respectively, in their January 1 capital balances. Net income for the year was $261,000. How much is distributed to Conyers and Poodle

Answer 1

Answer:

Conyers = $38,580

Poodle = $222,420

Explanation:

Annual salary allowance to Poodle of $146,160.

Interest of 6% on each partner's capital balance on January 1.

Any remaining net income divided to Conyers and Poodle, 1:2.

net income $261,000

distribution of interests:

• Conyers = $54,000 x 6% = $3,240
• Poodle = $93,000 x 6% = $5,580

drawings (annual salary allowance):

• Poodle = $146,160

remaining income = $261,000 - $146,160 - $3,240 - $5,580 = $106,020

• Conyers (1/3) = $35,340
• Poodle (2/3) = $70,680

total distributed:

• Conyers = $3,240 + $35,340 = $38,580
• Poodle = $5.580 + $146,160 + $70,680 = $222,420