Christle and Jergens formed a partnership with capital contributions of $220,000

Question

Christle and Jergens formed a partnership with capital contributions of $220,000 and $320,000, respectively. Thelr partnership agreement calls for Christle to recelve a $52.000 per year salary. Also, each partner is to receive an interest allowance equal to 10% of a partner's beginning capital Investments. The remaining income or loss is to be divided equally·lf the net income for the current year is $116,000, then Christie and Jergens's respective shares are: $32.000; $84.000 o $58,000: $58.000. $79.000, $37000 $47.259: $68.741 O $74.000, $32.000.

Explanation / Answer

Answer:- Christle respective share =$79000

                Jergens respective share =$37000

Explanation:-

Interest on Christle capital’s = $220000*10% =$22000

Interest on Jergens capital’s = $320000*10% =$32000

Christle salary = $52000

Net income of the current year =$116000

Net income after interest on capital & partner salary =$116000-$22000-$32000-$52000

                                                 = $10000 (will be distributed equally in both partners)

Share of Christle = Capital interest+Salary+ Current year income share

                             =$22000+$52000+$5000=$79000

Share of Jergens = Capital interest+ Current year income share

                             =$32000+$5000=$37000

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