Answer:
net income of Reagan = $5000
Explanation:
given data
profit companywide = $125,000
profit from the Sacramento = $75,000
loss from the San Francisco = $25,000
profit from the remaining stores = $75,000
to find out
how much income will be allocated to Reagan
solution
we know that Reagan's Profit From own store is 25,000 and 70% belongs to them only
so here profit to be distributed on pro rata basis will be as
profit to be distributed = $75000 + 30% of Roberto profit - 30% of Reagan profit ..................1
profit to be distributed = $75000 + 30% × $75,000 - 30% × $25,000
profit to be distributed = $90000
and here share of Reagan is = 25% of $90000
share of Reagan = $22500
so net income of Reagan will be here as
net income of Reagan = $22500 - 70% of 25000
net income of Reagan = $5000
