Cody Paulson and Hannah OBrien formed a partnership, dividing income as follows: 1. Annual salary allowance to
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Cody Paulson and Hannah O’Brien formed a partnership, dividing income as follows:
1. Annual salary allowance to Paulson of $26,000.
2. Interest of 5% on each partner’s capital balance on January 1.
3. Any remaining net income divided to Paulson and O’Brien, 2:1.
Paulson and O’Brien had $50,000 and $120,000, respectively, in their January 1 capital balances. Net income for the year was $33,000.
How much net income should be distributed to Paulson?
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