Question

The average capital investments for 2006 were:

Jones......................................................................... $100,000

King........................................................................................ 200,000

Lane................................................................................. 300,000

How much of the $90,000 partnership profit for 2006 should be allocated to Jones?

A)$15,000
B)$27,000
C)$30,000
D)$33,000

Answer 1

A)$15,000

Step-by-step explanation:

jones 100,000

king 200,000

lane 300,000

Total 600,000

Assuming profit are distributed based on capital investment, jones will receive:

100,000/600,000 = 1/6 of the profit

proft x jones ratio = allocate income to Jones

90,000 x 1/6 = 15,000

This will be the amount of profit attributable to Jones.