Question

Singer and McMann are partners in a business. Singer's original capital was $36,200 and McMann's was $53,200. They agree to salaries of $12,900 and $18,500 for Singer and McMann, respectively, and 10% interest on original capital. If they agree to share the remaining profits and losses in a 3:2 ratio, what will Singer's share of the income be if the income for the year is $71,600?

Answer 1

Answer: $35,276

Explanation:

They both have salaries of $12,900 and $18,500 for Singer and McMann, respectively as well as 10% of their initial investment.

Removing both their salaries from the income will be,

= 71,600 - 12,900 - 18,500

= $40,200

Then remove the interest of 10% on the original income that both of them earn from the remaining income.

= 40,200 - (0.1 * 36,200) - (0.1 * 53,200)

= 40,200 - 3,620 - 5,320

= $31,260

Now, out of this remaining figure, they share profits in a ratio of 3:2.

Singer would therefore get 3/3+2 of the income.

= 31,260 * 3/5

= $18,756

Now therefore, all of the money that Singer got would be,

= 12,900 (salary) + 3,620 (10% interest) + 18,756

= $35,276

Singer's share of the income be $35,276