Question

Steve King and Chelsy Boxer formed a partnership, dividing income as follows: Annual salary allowance to Boxer of $125,670. Interest of 5% on each partner's capital balance on January 1. Any remaining net income divided to King and Boxer, 1:2. King and Boxer had $60,000 and $111,000, respectively, in their January 1 capital balances. Net income for the year was $213,000. How much is distributed to King and Boxer?

Answer 1

King = 29260

Boxer = 183740

Step-by-step explanation:

The Distribution of Net income will be as follows.

Net Income $213000

Less: Interest on Capital

King 3000

Boxer 5550 (8550)

Less: Salary

Boxer (125670)

Residual Profit 78780

Share of Profit

King [78780 * 1/3] 26260

Boxer [78780 * 2/3] 52520

King = 3000 + 26260 = 29260

Boxer = 5550 + 125670 + 52520 = 183740