The partnership agreement of Jones, King, and Lane provides for the annual alloc

Question

The partnership agreement of Jones, King, and Lane provides for the annual allocation of the business's profit or loss in the following sequence: Jones, the managing partner, receives a bonus equal to 25 percent of the business’s profit. Each partner receives 19 percent interest on average capital investment. Any residual profit or loss is divided equally. The average capital investments for 2018 were as follows: Jones $ 125,000 King 250,000 Lane 375,000 How much of the $58,000 partnership profit for 2018 should be assigned to each partner?

Explanation / Answer

Distribution of profit

Jones King Lane Total Profit 58000 Jones bonus (25% of 58000) 14500 -14500 Interest on average capital investment (19% of average capital invested) 23750 47500 71250 -142500 Net loss Distribution (Equally) -33000 -33000 -33000 99000 Net profit distribution 5250 14500 38250 0

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.