a. The partnership of Carol and Jack began with the partners investing $5,000 and $3,000, respectively. At the end of the first year, the partnership earned net income of $7,800. Under each of the following independent situations, calculate how much of the $7,800 each is entitled to:
Situation 1: No agreement on how income was to be shared.
Situation 2: Carol and Jack share income based on the beginning-of-year investment ratio.
Situation 3: Salary allowance of $2,860 to Carol and $2,490 to Jack. Ten percent interest on beginning year’s investment. Remainder split equally.
b. In Situation 3, what would the earnings to each partner be if net income were $4,800?