Answer:
A. Profit sharing of Net income for both the Kate Deleo and Joe Desmond will be same because there is no agreement concerning the distribution of net income.
B. both partners will get 46000 each.
C. 10000 will be distributed to both the partners.
D.
60% of 22000 = 13200 paid to Deleo
40% of 22000 = 8800 paid to Desmond
Explanation:
Following are the independent assumptions
A. There is no agreement concerning the distribution of net income.
B. Each partner is to receive 10% on their original investment, and the remainder divided equally.
C. DeLeo and Desmond are to receive a salary allowance of $35,000 and $45,000 respectively, and the remainder divided equally.
D. Each partner is to receive 10% on their original investment, DeLeo and Desmond are to receive a salary allowance of $30,000 and $40,000 respectively, and the remainder divided as follows: 60% to DeLeo and 40% to Desmond.
Solution:
A. Profit sharing of Net income for both the Kate Deleo and Joe Desmond will be same because there is no agreement concerning the distribution of net income.
B.
Kate Deleo Invested = 50,000
Desmond Invested = 30,000
End of Fiscal Year Net Income = 100,000
10% of Kate Investment = 50,000 x 10% = 5000
10% of Desmond Investment = 30,000 x 10% = 3000
Total investment 10% = 8000
So.
Net Income = 100000 - 8000 = 92000
Divide this 92000 in 2 = 96000/2 = 46000
So, Remaining net income is = 46000 each.
Hence, both partners will get 46000 each.
C.
Salary allowance for Kate Deleo = 35000
Salary allowance for Desmond = 45000
Total Salary Allowance = 80000
Net income at the end of fiscal year = 100000
So, subtract the Total Salary Allowance from 100000 and divide the answer into 2.
Remaining = 100000-80000 = 20000
Remaining amount = 20000/2 = 10000
So,
10000 will be distributed to both the partners.
D.
Kate Deleo Invested = 50,000
Desmond Invested = 30,000
End of Fiscal Year Net Income = 100,000
10% of Kate Investment = 50,000 x 10% = 5000
10% of Desmond Investment = 30,000 x 10% = 3000
Total investment 10% = 8000
Salary allowance for Kate Deleo = 30000
Salary allowance for Desmond = 40000
Total Salary Allowance = 70000
Net Income at the end of fiscal year = 100000
Subtract 8000 and 70000 from the net income.
100000-70000-8000 = 22000
Now, Deleo will get 60% of 22000
and Desmond will get 40% of 22000
60% of 22000 = 13200 paid to Deleo
40% of 22000 = 8800 paid to Desmond
