The partnership contract for Hanes and Jones LLP provides that Hanes is to recei

Question

The partnership contract for Hanes and Jones LLP provides that Hanes is to receive a bonus of 20% of net income (after the bonus) and that the remaining net income is to be divided equally. If the partnership income before the bonus for the year is $57,600, Hanes' share of this pre-bonus income is:

A. $28,800. B. $33,600. C. $34,560. D. $35,520. E. $38,400.

The answer is B, but I cannot understand the meaning of this multiple question. Could you please explain the question and explain how to calculate? Thank you!

Explanation / Answer

Answer:

Let net income after bonus be x.

Then bonus amount would be x * 20% = 0.2x

Net income before bonus = Net income after bonus + Bonus amount

$57,600 = x + 0.2x

x(Net income after bonus) = 57,600/1.2 = $48,000

Hanes' share in after bonus income = Net income after bonus * 50%

= $48,000 * 50% = $ 24,000

Hanes' total share = $24,000 + $48,000 *20%(Bonus amount)

= $24,000 + $9,600 = $33,600 (Answer B is correct).

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