Question

Seth and Rachel have original investments of $50,000 and $100,000, respectively, in a partnership. The articles of partnership include the following provisions regarding the division of net income: interest on original investments at 15%; salary allowances of $24,000 and $20,000, respectively; and the remainder to be divided equally. How much of the net income of $90,000 is allocated to Seth?

Answer 1

Answer:

The amount of the net icome of $90,000 to be shared to Seth is $43,250.

Explanation:

Net income shared to Seth = net income - interest on capital at 15% - salary allowance -balance to be equally shared

= $90,000 - 15%(90000) - $20000 -  $11750

= $43250

Therefore, the amount of the net icome of $90,000 to be shared to Seth is $43,250.