Jesus and CJesus and Carlos have capital balances of $100,000 and$300,000 respec
ID: 2457959 • Letter: J
Question
Jesus and CJesus and Carlos have capital balances of $100,000 and$300,000 respectively. Jesus devotes full time and Carlosone-half time to the business. Determine the division of$120,000 of net income under each of the following assumptions:
(a)
No agreement as to division of net income.
(b)
In ratio of capital balances.
(c)
In ratio of time devoted to business.
(d)
Interest of 10% on capital balances and remainder equally.
(e)
Interest of 10% on capital balances, salaries of $40,000 to Jesusand $20,000 to Carlos, and the remainder equally.
(a)
No agreement as to division of net income.
(b)
In ratio of capital balances.
(c)
In ratio of time devoted to business.
(d)
Interest of 10% on capital balances and remainder equally.
(e)
Interest of 10% on capital balances, salaries of $40,000 to Jesusand $20,000 to Carlos, and the remainder equally.
Explanation / Answer
A. No agreement, which means they share 50% each. Jesus - $ 60,000 Carlos - $ 60,000 B. In ratio of capital balance Jesus Carlos 1 : 3 Jesus - 30,000 Carlos - 90,000 120,000 * 1/4 and 120,000 * 3/4 C. In ratio of time devoted to business. Jesus Carlos 1 : 1/2 Jesus 80,000 Carlos 40,000 120,000 * 1/1.5 and 120,000 * .5 / 1.5 D.Interest of 10 % on capital balances and remainder equally Jesus Carlos interest 10,000 30,000 N.I 40,000 40,000 50,000 70,000 E. Interest of 10% , salaries and the remainder Jesus Carlos Interest 10,000 30,000 Salaries 40,000 20,000 Profit 10,000 10,000 60,000 60,000
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