Jan, Pat, and Misa are partners in South Central Company. The partnership agreement states that Jan is to receive 8 percent interest on his capital balance at the beginning of the year, Pat is to receive a salary of $200,000 a year, and Misa will be paid interest of 6 percent on his average capital balance during the year. Jan, Pat, and Misa will share any income or loss after salary and interest in a 5:3:2 ratio. Jan’s capital balance at the beginning of the year was $1,200,000, and Misa’s average capital balance for the year was $1,440,000.

Determine each partner’s share of income and losses under the following conditions. In each case, the income or loss is stated before the distribution of salary and interest.
1. Income was $1,090,400.
2. Income was $311,200.
3. The loss was $113,600.

  • CreatedMarch 26, 2014
  • Files Included
Post your question