Question

Applying the interest allowance method, compute Julie's and Jennifer's share of net income if Julie invested $40,000 and Jennifer invested $24,000 at an 8% interest rate, with the remainder to be divided equally. Net income was $10,000.

Answer 1

Answer:

Julie's share = $3200+2940 = $6140

Jennifer's share = $1920 +$3200 = $5120

Step-by-step explanation:

Julie invested $40,000  at an 8% interest rate = 8/100 * 40,000 = $3200

Jennifer  invested $24,000 at an 8% interest rate = 8/100 * 24,000 = $1920

Now to find the remainder profit add the interest rate of julie and jennifer and subtract the answer from net income.

Julie interest  = $3200

Jennifer interest  =  $1920

Total interest = 3200+1920 = $4120

Now subtract it from net income.

10,000 - 4120 = $5880

Total Remainder profit = $5880

Now to  divide the remainder $5880 equally between julie and jennifer, simply divide 5880 by 2

= 5880/2 = $2940

Thus julie and jennifer would have $2940 remainder each.

Julie's share = $3200+2940 = $6140

Jennifer's share = $1920 +$3200 = $5120 ....