Question

Samuel and Jackson had capital balances of $60,000 and $90,000, respectively, at the beginning of the current fiscal year. The articles of partnership provide for salary allowances of $25,000 and $30,000, respectively; an allowance of interest at 12% on the capital balances at the beginning of the year; and the remaining net income divided equally. Net income for the current year was $65,000. Present the Division of net income section of the income statement for the current year.

Answer 1

Net income $65,000

Step-by-step explanation:

Net income $65,000

Samuel Jackson

Division of net income

Salary allowance $ 25,000 $30,000= $55,000

Interest allowance $7,200 $10,800=$18,000

Samuel ($60,000*12%) $7,200

Jackson($90,000*12%) $10,800

Remaining income

($8,000/2)

-$4,000 - $4,000=-$8,000

Net income $28,200 $36,800=$65,000

Remaining income = Net income - (salary allowance + interest allowance)

$65,000 - (55000 + 18000)

$65,000 - $73,000

$-8,000